Mint Coins a New Reason for Layoffs: Extra Change
There’s not much talk here these days about a surplus, except for the surplus of coins in circulation.
And because there are so many pennies, nickels, dimes and quarters changing hands, the U.S. Mint has announced that 357 people, about 12% of its work force, are losing their jobs, with the San Francisco plant especially hard hit.
Last year the Mint made about 25 billion new coins. This year the number was expected to be only slightly smaller, but now the estimate has fallen to just 15 billion coins.
The Mint simply says that the drop in the number of new coins reflects a downturn in the economy. In addition, the Federal Reserve doesn’t need any additional coins to distribute to banks; it already has more than enough in its vaults.
Coinstar can be partially credited with creating the coin surplus. The change-deposit machines, found in 9,500 supermarkets around the country, turn jars of pennies and jingling piggy banks into crisp dollar bills in a matter of minutes.
The green machines made their debut in 1992 at four supermarkets in San Francisco. Last year, Coinstar processed 1.2 billion coins and will do about the same this year, company spokesman George White said.
While some consumers may be exchanging their rainy-day stashes for cash as the economy weakens, White says that machine usage hasn’t spiked in recent months.
He estimated that Americans are holding on to $7.7 billion in the form of spare change, almost as much as is currently in circulation.
The surplus in coins is not a post-Sept. 11 phenomenon, said James Benfield, executive director of the Coin Coalition, a Washington lobbying group that supports use of the dollar coin.
Earlier this year, Benfield had documented that banks, which at one time had faced spot shortages of coins as popularity of state quarters rose, were being stuck with massive coin inventories. One California bank had more than 1 million pennies in its vault, he said.
“At some point, the Mint will have to ramp down production because demands from commerce are falling,” Benfield said in the April issue of Coin World, a collectors’ magazine.
The reason for his prediction? It wasn’t the economy. Last December, the Brink’s armored carrier firm began charging storage fees to banks that used its vaults. Storing deposits from Coinstar in anticipation of a coin shortage would now cost money, so banks simply deposited those coins with the Federal Reserve, Benfield said. This caused a big disruption to the system.
This massive deposit--coupled with the slowing economy, Coinstar’s growing popularity and the Mint’s delayed reaction to the surplus--has created the “gargantuan glut of coins,” Benfield said.
The Mint employs 2,861 workers at its four manufacturing outlets and main Washington office. The San Francisco facility, which is the exclusive manufacturer of proof coin sets, has already laid off 101 workers from a staff of 532; more cuts are expected in this new round of layoffs.
An additional 144 people have lost their jobs in Denver and Philadelphia, where coins for general circulation are manufactured. The Mint’s plant in West Point, N.Y., makes the precious-metal American Eagle bullion coins. This plant should not see many layoffs, Mint officials say, because the demand for these collector coins remains strong.
