Act is still in committee. Its possible that what happens to the penny could end up depending not on the law, but on decisions made by businesses. If consumers in 1857 could get along without halfpennies, then modern consumers can almost certainly manage without a coin thats worth less than one-tenth as much. Life Without Pennies. The answer, for a variety of reasons, is a resounding "yes.". A HuffPost/YouGov poll conducted in January found that only 34 percent of Americans are in favor of eliminating the penny, while 51 . We should get rid of pennies because it cost less and is useless but it could be helpful, I think we should keep the penny because it is sill money, what the creep who ever wrote these are all bum hahahahaha. However, it would hit low-income Americans especially hard. However, a newer study by economist Robert Whaples, published by the Eastern Economic Journal in 2007, contradicts Lombras findings. Americans for Common Cents, the pro-penny group funded by the zinc industry, calls the claim absurd. In the first place, the group argues, employees who spend less time counting out change wont necessarily spend it on other, more useful tasks. In Canada, at least, eliminating the penny has not led to a widespread increase in prices. Whats less clear is why Americans are so committed to a coin with so little monetary value. (4) Considering that the penny has virtually no purchasing power, it does nothing except add unnecessary weight to our pockets and purses. -Pennies are less costly to make than nickels, as 5 pennies, costing 6.3 cents to make at 1.26 cents per penny are less cheaper than nickels, which are cost 7.7 cents to make. List two to three ways. Aside from its Lincoln portrait, though, it has undergone a number of major changes in design and composition. In 1943, the Mint produced cents made of zinc-coated steel in order to conserve copper, a metal vitally needed for military uses during that pivotal year at the height of World War II. The current cost for manufacturing a nickel is 7.29 cents per coin. In all, it lost $58 million and the Mint, keep in mind, is a federal agency that traditionally makes money in more ways than one. Americans Oppose Abolishing the Penny," theharrispoll.com, Sep. 22, 2015, US Department of the Treasury, "Resource Center: Denominations," treasury.gov, June 15, 2018, John McCain, "Senators John Mccain & Mike Enzi Reintroduce the Coins Act to Save Billions in Taxpayer Dollars," mccain.senate.gov, Mar. Aaron's argument resonates with many modern consumers who remember when a person could buy a mini Tootsie Roll, Mary Jane or ice cream cone at the candy store with just one penny. Dominic Townsend is a successful article author based in New York City. You have it. Men are nearly twice as likely as women to favor dropping the penny (39% vs. 20%). 2023 Leaf Group Ltd. / Leaf Group Media, All Rights Reserved. Although originally made of pure copper, pennies today are composed of 97.5% zinc and 2.5% copper. The group's mission is to keep the penny in use. Crypto possibilities are coming into play as more and more businesses accept digital currencies as payment. Analyze the pro argument of Mark Weller from Americans for Common Cents. The current cost for manufacturing a nickel is 7.29 cents per coin. There are multiple upsides as well as downsides to America discontinuing minting the penny. Nickels cost even more to make - If we eliminate the penny, we will need more nickels in circulation. The typical store doesn't even have them available for purchase or give them out in change - they flat-out refuse! Lombra did his careful analysis by simply looking at a convenience stores prices and assuming that each consumer would buy three items in one visit. While every effort has been made to follow citation style rules, there may be some discrepancies. The penny is an important part of our history and culture. The mint produces billions of these coins every year. Report this Content. Supporters of the penny dont buy this argument. All Rights Reserved. One-cent pieces account for nearly three-fourths of the coins now A pro-penny group funded by the zinc industry calls these claims absurd, as they argue employees would save more time spent counting change than people would necessarily spend if we got rid of them. Management decided that losing a cent or two on most transactions was better than having long lines of customers waiting for change. So long as most Americans remain attached to the penny whether their reasons are logical or not its unlikely that a bill to eliminate it will ever make it through Congress. The Department of Defense banned the use of pennies at overseas military bases in 1980 because the coins were deemed too heavy and not cost effective to ship. At this rate, the United States loses millions of dollars producing pennies and nickels. For example the article Should we get rid of the Penny 8 Reasons to Keep it vs Eliminate it says,"Design Life-Cycle.org a sight created by students at the University of California, calculates that just transporting pennies to banks-not even counting any other stage of . [28] Harvard economist Greg Mankiw says that this wasted time costs the US economy around $1 billion annually. It takes a lot of time for volunteers to pick up, clean, sort, and count all those coins, and the more pennies there are in the mix, the less value the charity gets for each coin it handles. Pennies don't last forever, and the US Mint explains that the copper surface can corrode away after a few years. That doesnt sound like much, but a 2019 Federal Reserve study shows that the average consumer still makes 11 cash transactions each month and according to the Bureau of Labor Statistics, there are over 343 million consumers in the country. When the Baby Boomers were young, a penny still had some value. [37], 7. Add it all up, and it comes to more than 25 million hours wasted each year. To the average American, this is a perfect match: the common mans President on the common mans coin. Once the timer stops, you can always click . The new penny, first issued in 1857 with a Flying Eagle design, was about one-third smaller in diameter than the large cent and less than half the weight. President Obama in his 2014 YouTube chat suggested that Americans are attached emotionally to the penny because it brings back happy childhood memories of saving pennies in piggy banks and seeing them eventually turn into dollars. It also says there are "many reasons to believe" that time spent at the register could actually increase, rather than decrease, if pennies are eliminated. Through careful analysis of 200,000 convenience store transactions, Whaples concluded that sales taxes and other fees charged to consumers were slightly ahead of prices rounded to the nearest nickel which meant it couldn't possibly affect consumer spending or trigger widespread inflation - two claims made by Lombra. Even the US Mint admits that the cost of producing a penny in 2007 could be as high as 1.4 cents. Theyre so hard to use that they end up stuffed in jars or abandoned on sidewalks. This could potentially have a big impact on charitable organizations that rely heavily on donations from their supporters. One problem with this argument, according to penny proponents, is that if there were no pennies, the Mint would have to produce more nickels. Author: www.thebalancemoney.com. (Also Nickels. A pro-penny group backed by economist Raymond Lombra testified before the Senate Banking Committee in 2006 that his careful statistical analysis of store prices showed that rounding cash sales to the nearest nickel would cost consumers billions in extra costs. Discounting the fact that those Wheat Cents might have some slightly higher . These coins have become highly sought-after collectibles and in 2010 one sold for $1.7 million - a record amount paid for a 1943 copper cent! To pay the exact amount, we have to either hand over some pennies or receive some in change. the penny under one cent. The army don't think we even need the penny because it too heavy to travel. Danielle DeLee began writing in 2010. As both stores and individuals stop keeping pennies on hand, banks wont need to supply as many. Anti-penny advocates are fond of pointing out that today, the penny costs taxpayers more to produce than its actually worth. [4] Several unsuccessful legislative efforts have sought to bring about the pennys extinction. (6) The penny has become useless as a means of exchange. More recently, the mint changed the cupro-nickel clad dollar coin (the Susan B. Anthony) to the "golden dollar" type used in theSacagaweaandPresidential Dollartypes. It takes a great deal of energy to produce pennies and according to the Environmental Protection Agency, it releases 107 million pounds of carbon dioxide (CO2) into the atmosphere every year while transporting them. Anti-penny advocates point to the 2020 annual report from the U.S. Mint, which states that it costs 1.7 cents to produce a single penny. Without pennies to make exact change, prices would have to be rounded up or down to the nearest nickel and skeptical Americans fear that most of the rounding would be up, increasing the cost of much of what they buy. The elimination of the penny would cause prices to be rounded up to the nearest nickel, which would be a burden on consumers, businesses, and the economy. Should we get rid of the penny? First, consumers benefit with a low denomination coin. The penny was first minted in 1857. All prices would have to be rounded to the nearest nickel. Pennies are no longer made from pure copper . The U.S. Mint does lose money on pennies and nickels. Sign up for more easy craft ideas, fun hobbies, and DIY projects, Lincoln Wheat Penny Key Dates, Rarities and Varieties. Faced with a similar sea of red ink, Canada stopped making cents in May 2012. He has written for many top publications, such as The New Yorker, Huffington Post, and The Wall Street Journal. Learn how to pay for IVF with these strategies for fertility financing. 3. Summary: Pennies are made of zinc and copper, and zinc can be harmful: Zinc mining and industrial use has negative . Consequently, all government payments tied to the CPI, such as Social Security, would rise, costing the government $1.5 billion ($3 billion in todays dollars) over five years. The primary reason is the soaring cost of metals. Some are opposed to change, and others are attached to the penny for sentimental reasons. There's a downside to life without pennies. Robert M. Whaples, Professor of Economics at Wake Forest University, crunched the numbers and found that The convenience stores and the customers basically broke even. [30], 1. There are reasons for the elimination of the penny, mostly having to do with the inconvenience of the small coin. There's been a debate brewing over the value of the penny, and conversations have grown amid a national coin shortage. Why we should keep the penny. )," YouTube.com, Sep. 6, 2010, Greg Mankiw, "Get Rid of the Penny!," gregmankiw.blogspot.com, Apr. Instance penny supporters claim that the penny still holds value and should be kept in circulation. And since the Mint produces billions of pennies a year, the government loses millions of dollars annually in the process. Reduced coin usage linked to the pandemic has already had an impact. But if we get rid of the penny we would have to stick with the nickel. His mission is to use his platform as an author to bring awareness and perspective on important issues affecting everyday life. In 2017 it cost the U.S. Mint 1.8 cents to make each penny and 6.6 cents for each nickel. We're Moving Away from Currency. Those who support getting rid of the penny argue that it is useless, inconvenient and takes up space that could be given to other denominations of currency. We Won't Forget President Lincoln. In addition, zinc is toxic in high doses and small amounts can contaminate water and soil in the area surrounding ore roll producing pennies. Economist Greg Mankiw of Harvard University argues that pennies are simply no longer useful as a means of exchange: When people start leaving a monetary unit at the cash register for the next customer, the unit is too small to be useful.. The group marshals support from consumers, charities and small businesses who argue that without the penny there will be higher prices due to rounding up costs. The penny should be abolished because it costs more to produce than it is worth . Explain your answer(s). Americans were wary of underweight coins at that time, so the government decreed that all U.S. coins even copper coins must contain enough metal to be worth very nearly as much intrinsically as their monetary face value. Dimes cost less than $0.04 to make, so the Mint could produce more of those without losing money. [25] A California company called Mikes Bikes has banned the penny from its registers because Making pennies wastes natural resources [and] is toxic to people and the environment. [26], The use of pennies in paying for goods and making change adds time to sales transactions. However, the fact that this poll was conducted by a pro-penny group suggests that the questions might be somewhat biased toward the pro-penny side. In his spare time, Dominic enjoys running along the Hudson River and exploring the citys art galleries. The elimination of a $58 million dollar annual cost on a federal government running trillion dollar annual deficits each and every year isnt going to move the needle one micrometer back towards fiscal sanity in this country. Get DIY project ideas and easy-to-follow crafts to help you spruce up your space. Both sides in the penny debate make some good points, and the solution is far from being an easy decision. However, it is removed from circulation when tendered at a Canadian banking facility. Freshly minted pennies at the US Mint in Denver Those profits result from seigniorage, a positive cash flow that occurs when coins face value exceeds the cost of minting them, rather than the other way around. That means the cost of some items would go up. The Penny Should Abolish The Penny. Aaron notes in a Brookings Institution editorial that eliminating pennies would help with cash transactions as well, since it would make calculations easier without having to deal with fractions of cents. Should the penny stay in circulation? He has written for many top publications, such as The New Yorker, Huffington Post, and The Wall Street Journal. [16] The Ms. Cheap Penny Drive for Second Harvest in Tennessee raised enough to pay for 316,039 meals for the hungry in 2017. However, in recent years, there has been much debate about whether or not we . [5], Mark Weller, Executive Director of the pro-penny group Americans for Common Cents, says, The alternative to the penny is rounding to the nickel, and thats something that will negatively impact working families every time they buy a gallon of gas or a gallon of milk. [6], The US Federal Reserve found that minorities and low-income people are more likely to use cash than credit cards. Penny opponents such as Kolbe, Whaples, and Mankiw have all expressed the hope that the pandemic and the resulting coin shortage will finally provide the incentive for Congress to get this virtually worthless coin out of our pockets and our lives. This change was likely an attempt to cut costs further as the cost of copper had risen again by this time. In 2010, it cost 1.67 cents to produce each penny. Mining zinc and copper produces carbon dioxide emissions and pollutants, and uses vast amounts of energy. It's a Money Loser for Retailers. The debate over whether or not to get rid of the penny has been going on for years. However, the penny is a very sentimental coin to most Americans, and many people fear that eliminating the penny would raise prices because things would need to be rounded up to thenearest nickel. One of the overlooked reasons why we should keep the penny is that the abolition of the penny would force an increase in the production of the nickel, as more nickels would be necessary to make up for the pennies that are not in circulation. Producing the penny costs taxpayers money: In 2021, each penny produced cost 2.10 cents to make and distribute. What Are Elastic, Unitary and Inelastic How to Approach Change in an Organization. Low rated: 2. To anti-penny advocates, thats a lot of costs for a coin that cant even buy a piece of gum anymore. You don't want to lose it. The existence of pennies helps raise a lot of money for charities. We may have financial relationships with some of the companies mentioned on this website. New Zealand got rid of its penny and two-penny coins without incident back in 1989, and in 1991 replaced their two lowest paper denominations with coins. It's the $2 bill and it's the rarest small-denomination currency in circulation, representing about 1 percent of our money. This not only weighs down our pockets, but it also holds up the line while we mess around counting out coins. Another significant change in U.S. coinage occurred without any catastrophic effects on commerce. Although debate continues today about whether we should get rid of the penny entirely or not, its long history is something worth noting and its clear that it has undergone some monumental changes over time from its composition to its patterns on both sides - which makes it an interesting part of our nations history. Please refer to the appropriate style manual or other sources if you have any questions. The official name for the US penny is one-cent piece, according to the US Department of the Treasury, but early Americans were allegedly in the habit of using the British term penny. [4][35], 4. Some supporters of the penny point out that its the only coin bearing the image of Abraham Lincoln, probably our nations most revered president. In 2017, Senators John McCain and Mike Enzi introduced S.759 Currency Optimization, Innovation and National Savings (or C.O.I.N.S.) Or will the Law of Supply and Demand keep putting upward pressure on metal prices and make it impractical to keep producing cents of any kind? . U.S. Securities and Exchange Commission. 1. "FAQs: How Issuers Work with DTC." Simply mix one tablespoon of salt with two tablespoons of white vinegar, then submerge the penny in the liquid for a few minutes. Supporters of the penny point to all-cash transactions as a reason why it should remain in circulation. Proponents of the penny argue that this small change could be felt most strongly by low-income Americans and according to a CNBC survey, nearly half of adults agree. Some of the arguments for keeping the penny are practical ones. The cost of making pennies in 2019 was 1.99 cents per coin. The cost of producing them is higher than face value. Make sure you have some later too. The penny costs an irrational amount of money compared to what it's worth. Those little extra costs could add up quickly. It's clear that the modern penny is no longer necessary in our financial system. Accessed Oct. 21, 2020. This means users can store and transact with their coins without interference from third parties such as banks or governments. There are plenty of DIY penny jewelry ideas out there, including a bracelet, a lucky penny necklace, and a bejeweled ring. 29, 2017, Andrew Stelzer, "Phasing out Pennies in a Bid for Change," npr.org, Nov. 29, 2009, Shaun O'Brien, "Consumer Preferences and the Use of Cash: Evidence from the Diary of Consumer Payments Choice Working Paper," frbsf.org, June 2014, Raymond E. Lombra, "Eliminating the Penny from the U.S. Coinage System: An Economic Analysis," Eastern Economic Journal, Fall 2001, Vancouver School of Economics, "Penny Rounding Profitable for Canadian Grocers: UBC VSE Student Research," economics.ubc.ca, Nov. 16, 2017, Reuters, "Pennies: The Throwaway Coins We Can't Let Go Of," latimes.com, May 31, 1994, Amy Livingston, "Should We Get Rid of the Penny? It will be a lot easier just to keep the penny because then we don't have to tell everyone to change. And since each nickel is worth five times as much as a penny, charities would gather five times as much money with each spare coin tossed into the jar. Whether you are starting your first company or you are a dedicated entrepreneur diving into a new venture, Bizfluent is here to equip you with the tactics, tools and information to establish and run your ventures. "IRA FAQs - Investments." "Open an IRA in 15 minutes." -- who dumped their low-denomination coins 30 years ago, will be laughing at our senseless jingling. The people who make less than $35,000 dollars a year need pennies. For one thing, consumers benefit from having the penny. References to products, offers, and rates from third party sites often change. A low-denomination coin helps keep prices in check. [1][13] The cost of making and shipping pennies includes some fixed costs that the US Mint would continue to incur even if we abolished the penny, because the Mint would still make other coins. According to the U.S. Environmental Protection Agency, zinc ores contain only 3% to 11% metallic zinc. Illustration: The Spruce /Danie Drankwalter. Also the penny is a big part . It too had very little purchasing power at the end of its life. Post date: 20 yesterday. That adds up to $2,100,000,000 every generation of only pennies. According to William Safire, in 1950 a penny would buy what a dime would buy today. The U.S. Mint reports that it costs nearly 1.6 cents to product one single cent (Grenoble, 2013). In response to this Youtube chat, members of Common Cents, a main pro-penny lobbying group which represents Jarden Zinc Products (a major producer of copper blanks used to mint coins) conducted polls showing that most Americans favor keeping the penny. She has written about personal finance and shopping strategies for a variety of publications, including ConsumerSearch.com, ShopSmart.com, and the Dollar Stretcher newsletter. To learn more, read our article on the possible economic impact of eliminating the penny. Get Rid of Stupid Pennies," acsh.org, June 17, 2016, Mike's Bikes, "Pennies Don't Make 'Cents,'" mikesbikes.com (accessed July 2, 2018), Retire the Penny, "It Makes 'Cents,'" retirethepenny.org (accessed July 2, 2018), Sebastian Mallaby, "The Penny Stops Here," washingtonpost.com, Sep. 25, 2006, Greg Mankiw, "How to Make $1 Billion," gregmankiw.blogspot.com, Sep. 25, 2006, Consumer Affairs, "The Penny's End Is Near," consumeraffairs.com, July 2006, Courtney Waite, "The Origination of the Lincoln Penny," livinglincoln.web.unc.edu, Apr. His mission is to use his platform as an author to bring awareness and perspective on important issues affecting everyday life. The price of zinc, which currently composes 97.5 percent of a penny, has tripled over the past 15 years. There have been several other minor changes in the coin metal composition. The pro-penny group backs up its claim by pointing to the work of economist Raymond Lombra. The change from brass, the previous composition, took place in 1982 as a cost-cutting measure because zinc was much cheaper than copper. Consider how you felt about the issue before reading this article. In 2020, the penny debate gained new attention as the coronavirus pandemic led to a nationwide coin shortage. In 1990, he testified before the Senate Banking Committee that his careful statistical analysis of prices showed that rounding cash sales up or down to the nearest nickel would cost consumers around $600 million per year (around $1.2 billion in 2021 dollars). For these types of payments, rounding to the nearest nickel would cost consumers an extra 2021 dollars annually. ProCon/Encyclopaedia Britannica, Inc. The alternative to the penny . For example, the zinc metals lobby, and the Coinstar company (who make those change-counting machines in the grocery store) will both fight hard to keep the penny in production. Americans have a love-hate relationship with pennies. They are also bf and environment this doesnt make your hands very very very stinky I dont like the smell of metal. Susan also belongs to the American Numismatic Society (ANS) and CONECA (error and variety coins club). Ironically, getting rid of it might actually make it more difficult for people to donate money since fewer coins would be available. Shopkeepers would have to either change the prices on all of the items in their inventories or reprogram registers to round automatically when an item is charged. Millions of consumers also oppose the cents elimination on economic grounds. The $2 bill, however, might be making a comeback. Perhaps the main issue is that some of the major opponents to getting rid of the penny are the producers of coin blanks and the U.S. zinc lobby -- the groups that profit from the production of the penny. Even during my childhood in the 1980s, there was a candy store not far from our house that sold penny candy in jars one penny for a mini Tootsie Roll, or two for a Mary Jane. The penny no longer serves that purpose. Numerous Americans are in favor of keeping it due to sentimental value, while others say it is just too costly. To access extended pro and con arguments, sources, and discussion questions about whether the penny should stay in circulation, go to ProCon.org. Accessed Oct. 21, 2020. Rating: 4 (257 reviews) Highest rating: 4. Her areas of writing expertise include economic theory and applications, Russian culture and scuba diving. The United States mint stopped minting pennies for general circulation after 2013 but cash transactions still make up less than 8% of all payments while credit and debit cards, as well as old-fashioned checks are used more often now than ever before according to Trading Economics. And if a single penny is useless, a whole bunch of pennies isnt much better. If we were to get rid of the penny, cash transactions would be rounded to the nearest nickel. You're saving it. The analysis also shows that tooth decay is still the most common reason for hospital admission with 30,000 children and young people aged 0-19 admitted to hospital last year. Pennies are basically worth pennies today, and they consume vast quantities of natural resources to produce. The penny debate gained renewed attention when the coronavirus pandemic led to a nationwide coin shortage as consumers moved towards contactless payment methods. If that is the case, then people would be less willing to part with spare change for charitable drives. If you try paying for something in a store with a fistful of pennies, you can expect dirty looks from both the clerk and the other customers if the store doesnt just flat-out refuse to take them. In all, it lost $58 million - and the Mint, keep in mind, is a federal agency that traditionally makes money in more ways than one. Learn all you need to know about United Airlines seat selection - tips and tricks to get the best deal and a comfortable flight every time. These composition changes ranged from temporary wartime alterations during World War II, to more permanent switches like using zinc instead of copper for the penny. The main pro-penny lobbying group is Americans for Common Cents, which represents Jarden Zinc, the company that makes the zinc and copper blanks from which pennies are produced.