US Retailers Are Running Out of Pennies

The Penn Shortage: A New Challenge for US Retailers

The United States is facing a unique economic challenge as businesses run out of pennies. This shortage, which began earlier this year following the Trump administration’s decision to discontinue minting one-cent coins, has already affected cash transactions across various retail sectors.

Background and Timeline

In February 2024, President Donald Trump announced that producing pennies was deemed wasteful due to high production costs. He called on the public to “rip the waste out of our great nation’s budget, even if it’s a penny at a time.” Despite these initial statements, the US Mint did not immediately cease production. It was only in May 2024 that the minting of pennies officially ended.

The Treasury Department estimated that shortages would start in early 2026 but this prediction came much sooner than anticipated.

By late August and early September 2024, US businesses began to notice a significant decline in available pennies. This scarcity has forced retailers to adapt their practices to manage cash transactions without sufficient change.

Impact on Retail Operations

“We first heard about the issue in late August, early September,” said Dylan Jeon, senior director of government relations with the National Retail Federation. “It’s really impacting any business that deals with cash payments.” The shortage has led many stores to round their cash sales up or down to the nearest five cents.

According to Mr. Jeon, this practice adds up quickly and can result in a loss of up to four cents per transaction for retailers across multiple stores. To avoid lawsuits and customer complaints, many businesses have chosen to round down transactions, but this approach is unsustainable long-term.

The National Association of Convenience Stores has highlighted that convenience stores are among the hardest hit by the penny shortage. Jeff Lenard, a spokesperson for the association, stated that such retailers often face significant challenges due to their high volume of cash transactions and limited storage space for small coins.

Proposed Solutions and Future Implications

To address this issue, some stores are urging customers to pay in exact change. Others are hosting promotions to encourage the public to bring extra pennies into circulation by offering discounts or other incentives. For example, convenience giant Kwik Trip has announced it will round down transactions to the nearest nickel, expecting a loss of up to $3 million this year.

While these solutions provide temporary relief, they do not address the root cause of the shortage.

The debate over whether to continue producing pennies or find alternative solutions continues in Washington. Mark Weller, executive director of Americans for Common Cents, argues that keeping pennies in circulation is important for lower-income Americans who primarily pay with cash.

He believes that eliminating pennies could disproportionately affect these groups and result in higher costs due to the need for more nickels. “These are people that don’t have the access to checking accounts and charge cards and banking services,” said Weller. “You hurting lower-income groups when you start rounding transactions.”

Experts suggest that federal guidance is needed to help both businesses and shoppers navigate this period of coinage scarcity. This includes clear instructions on how to carry out transactions, what to do with the coins, and general advice for managing cash payments during a time of shortage.

The penn shortage in the United States highlights the complex relationship between monetary policy, economic practices, and everyday consumer behavior. As this issue continues to unfold, businesses and policymakers will need to work together to find sustainable solutions that balance efficiency with fairness.