Last year, the U.S. mint produced more than 9 billion pennies. According to CBS (Ivanova, 2017), “Last year, each penny cost 1.5 cents to make — about 50 percent more than its face value — and all the pennies the U.S. Mint issued last year cost it $46 million. It’s the 11th year the cost to make a penny has been higher than its face value.”
When looking at the United States Mint 2017 Annual Report (2017), it clearly shows that pennies cost more to make than they are worth. To me, that is ridiculous enough in and of itself. But when you also look at the fact that the US mint is a branch of the treasury department which is funded by the government which is funded by taxpayer dollars, this is a completely obvious waste of taxpayer money that could be going to fund infrastructure, schools, and government programs.
Polls from Americans for Common Cents, a pro-penny group funded by the zinc and copper industry—that benefits from the production of pennies—say that “Nearly three-quarters of Americans (73%) were concerned that without the penny merchants might use price rounding to raise prices.”
And, as a matter of fact, Chipotle started rounding the receipts of customers to the nearest nickel around 2012. They chose to round to save time at the register, so the cashiers did not have to spend time handling pennies when helping customers with cash transactions. This caused outrage among restaurant goers—who preferred to keep their pennies—when a New Jersey man noticed that his receipts were being rounded up. Later that year, the chain switched their practices to only round down to the nickel, putting pennies in consumers’ pockets, because of the public affront regarding their time-saving practices. For Chipotle, this is a still a positive outcome. Why, you ask? Well, in their high traffic locations across the country it is in the chain’s interest to save time handling cash transactions by eliminating the use of pennies, so as not to lose potential customers due to long lines. So, when confronted with the evidence, it seems that this concept can apply to most businesses and become a win-win scenario for both companies and consumers (Woodruff, 2012; Sanburn, 2012).
Another claim frequently voiced by Americans for Common Cents is that donations to charitable organizations will drop if the penny ceases to be produced. However, pennies won’t stop being used overnight. They would be gradually taken out of circulation, and since stores will most likely no longer be required to accept them, customers will have more reason to donate their pennies to charities. In countries that stopped making their lowest valued coins, there have been no reports from charities suggesting that donations have decreased as a result. Indeed, at least 17 countries have eliminated their lowest denomination coins without any obvious negative financial repercussions for citizens or the government (Wikipedia contributors, 2018; Livingston, n.d.; Coin Collecting Enterprises, n.d.).
When, in a 2013 Google Hangout discussion, Youtuber and author John Green asked President Obama (two of my all-time favorite people) why the penny has not been retired despite its inefficiency, he replied, “It’s one of those things where I think people get attached emotionally to the way things have been. We remember our piggy banks and counting out all the pennies and then taking them and getting a dollar bill or a couple of dollars.” He went on to say, “This is not going to be a huge savings for the government, but any time we’re spending more money on something that people don’t actually use, that’s an example of something we should probably change.” I feel that this is a good example of why there has been next to no reform regarding the penny, although it has become very inefficient in the past decades. It’s hard to get reform on something that would only save the government 10 million dollars per year in wasted money (Kellogg, 2013). Of course, to people like you and me, that’s a lot of money, but for the Government and Treasury Department, it is hard to justify how much energy would have to be put into the discontinuation of the penny.
While researching information on the pros and cons of pennies and whether we should keep them, I kept coming across two organizations that have strong views about the production of the penny. Retire the Penny, a group dedicated to taking steps toward and retiring the penny, and Americans for Common Cents, a group dedicated to keeping it. Personally, although I agree more with Retire the Penny, I found neither of the websites extremely compelling. It felt to me like each of them was just presenting reasons the other side was incorrect, instead of actually giving explanations for their own opinions and what steps they were going to take to further their causes. This was a bit disappointing, but I see now why the issue hasn’t really come to the national stage—no one thinks to change anything they didn’t even realize was a problem.
When I looked closer at the cost to produce and distribute pennies, it seemed clear to me that the negatives of producing pennies outweigh the benefits for the economy.
Americans for Common Cents. More than 2/3 of Americans want to keep the penny. Retrieved from http://www.pennies.org/index.php/penny-polling
Coin Collecting Enterprises. Retrieved from http://coincollectingenterprises.com/information/coin-eliminated-by-country/
Ivanova, I. (2017, March 6). It cost 1.5 cents to make a penny last year. Moneywatch. Retrieved from https://www.cbsnews.com/news/it-cost-1-5-cents-to-make-a-penny-last-year/
Kellogg, C. (2013, February 15). See YA author John Green hang out with President Obama. Los Angeles Times. Retrieved from http://articles.latimes.com/2013/feb/15/entertainment/la-et-jc-see-author-john-green-hangout-with-president-obama-20130215
Livingston, A. Should we get rid of the penny?—8 reasons to keep it vs. eliminate it. Retrieved from https://www.moneycrashers.com/get-rid-penny-reasons/
Retire the Penny. Retrieved from http://www.retirethepenny.org/
Sanburn, J. (2012, August 30). Chipotle’s fuzzy math: Why they stopped rounding customers out of change. TIME. Retrieved from http://business.time.com/2012/08/30/chipotles-fuzzy-math-why-they-stopped-rounding-customers-out-of-change/
Sommer, J. (2012, April 7). Penny wise, or 2.4 cents foolish? The New York Times. Retrieved from https://www.nytimes.com/2012/04/08/your-money/canada-drops-the-penny-but-will-the-us.html
United States Mint 2017 Annual Report. (2017). Unit cost of producing and distributing coins by denomination. Retrieved from https://www.usmint.gov/wordpress/wp-content/uploads/2018/01/2017-annual-report.pdf
Wikipedia contributors. (2018, June 15). Withdrawal of low-denomination coins. In Wikipedia, The Free Encyclopedia. Retrieved 22:14, August 31, 2018, from https://en.wikipedia.org/w/index.php?title=Withdrawal_of_low-denomination_coins&oldid=846015243
Woodruff, M. (2012, August 30). Chipotle is stopping its secret practice of rounding up prices. Business Insider. Retrieved from https://www.businessinsider.com/chipotle-will-not-be-secretly-adding-pennies-to-customers-orders-anymore-2012-8