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Coinstar Disrupts U.S. Mint Production

Sam Eaton

After several record-breaking years of coin production, the U.S. mint is slowing down. A glut of coins on the market is forcing the mint to lay off hundreds of workers at its manufacturing plants. The slowing economy is largely to blame. But as KUOW’s Sam Eaton reports, the proliferation of coin-changing machines has altered the way the mint does business.

DARREN KLUGE HAS A RITUAL. EVERY OTHER WEEK HE BRINGS HIS ACCUMULATED POCKET CHANGE TO A SEATTLE SUPERMARKET AND DUMPS IT INTO A GREEN “COINSTAR” MACHINE. (sound of change being dumped) I have two jars, I have one for my small change and a jar for quarters. THE MACHINE COUNTS HIS CHANGE, SUBTRACTS A 9-CENT FEE FOR EVERY DOLLAR, AND PRINTS OUT A CASH RECEIPT. KLUGE PAYS ABOUT A DOLLAR FORTY TO CHANGE 16 DOLLARS OF QUARTERS, BUT HE SAYS IT’S WORTH IT. I’d rather have them sort it for me than me sit at home trying to roll it into rolls, less hazardous. MULTIPLY THIS TRANSACTION BY THOUSANDS OF PEOPLE DUMPING THEIR CHANGE JARS INTO 95-HUNDRED COINSTAR MACHINES. THAT’S A LOT OF COINS GOING BACK INTO CIRCULATION. SO MANY IN FACT THAT THE U.S. MINT IS LAYING OFF 357 PEOPLE. “COINSTAR” BASED IN BELLEVUE, WASHINGTON OPERATES THE MACHINES. DIANNE RENIHAN IS THE CHIEF FINANCIAL OFFICER. We’ve processed 4.4 billion dollars worth of coins through our network since inception. This year alone we’ll put through 1.3 or 1.4 billion dollars back into the economy. RENIHAN SAYS AT ANY GIVEN TIME NEARLY 8-BILLION DOLLARS IN CHANGE SITS IN PEOPLE’S HOMES. THAT’S ALMOST EQUAL TO THE COINS IN CIRCULATION. BUT, SHE SAYS, UNTIL COINSTAR, PEOPLE DIDN’T HAVE A CONVENIENT WAY TO MOVE THAT MONEY. Banks basically don’t want your coins. If you think about it they’re trying to get people out of their lobbies not into their lobbies. So all of these coins are just accumulating in people’s top dresser drawers. IN NINE YEARS COINSTAR HAS TAPPED THIS MARKET WITH ITS GREEN COIN COUNTING MACHINES. THE PUBLICLY TRADED COMPANY EXPECTS NEXT YEAR’S PROFITS TO INCREASE AT LEAST FIVE-FOLD. JIM BENFIELD OF THE COIN COALITION, A WASHINGTON LOBBY FOR THE GOLDEN DOLLAR, SAYS COINSTAR’S SUCCESS DOESN’T SURPRISE HIM. It’s really hard to spend two or three gallons worth of pennies, it’s not a very liquid asset-it might pour like a liquid but it’s not very spendable-so what Coinstar has done is they’ve brought liquidity back to those stashes of coin. AND HE SAYS THIS COMPANY HAS GIVEN THE U.S. MINT A RUN FOR ITS MONEY. MINT OFFICIALS DECLINED AN INTERVIEW, BUT ADMIT COINSTAR HAS FORCED THEM TO CHANGE THEIR FORECAST MODEL. THE COMPANY HAS NEARLY MATCHED THE NUMBER OF COINS THE MINT PRODUCES EACH YEAR. AND THE DEMAND FOR COINS PLUMMETS WHENEVER A NEW COIN COUNTING MACHINE IS INSTALLED. JIM BENFIELD CALLS THIS THE COINSTAR EFFECT. But then something else happens and it’s called the reverse Coinstar effect. Wow, I know I can liquidate my coins any time I want to so I’m going to start my Christmas fund over here in the corner and come December I’m going to spend those coins. IN OTHER WORDS COINSTAR CAN CAUSE PEOPLE TO HOARD COINS AS WELL. (SFX: supermarket and sound of coins) AND HABITUAL COINSTAR USER DARREN KLUGE SAYS HOARDING’S NOT SUCH A BAD IDEA. It’s kind of like having an account, but not having an account under a bank. NOT THAT HIS MONEY WILL EARN ANY INTEREST SITTING IN A PENNY JAR, BUT THAT DOESN’T SEEM TO BOTHER HIM. HE SAYS THAT’S WHAT A PAYCHECK’S FOR. SAM EATON, KUOW, 94.9, PUBLIC RADIO.