Why Are Pennies Still A Thing?

Why Are Pennies Still A Thing?

In the spirit of John Oliver and Sam Seaborne, I explore the pros and cons of America's most worthless coin.

Money Crashers

“A penny saved is a penny earned.” Well, not exactly. A physical penny costs 1.8 cents to make and is only worth one cent. The penny cost more to make than it is actually worth. According to anti-penny scientist, Jeff Gore, Americans spend about 2.4 hours handling pennies each year, which is a small amount of time when compared with the necessity of money in our country. In the scope of things that the government wastes money on the penny may be the simplest ones for us to change. Canada and Australia have done it. Why can’t we?

In 2014, the U.S government spent $132 million to make $50 million worth of pennies. That puts a whole new meaning to the phrase you have to spend money to make money. The penny is so expensive to make because of what it is made out of. After 1982, the Government switched from making pennies out of copper to making them out of 97.5 percent zinc and only 2.5 percent copper . Although this somewhat decreased the cost of manufacturing, the penny still costs more to make, but somehow seven billion new pennies have been circulated since 2013. Out of all those pennies that are put out, only about one-third of those pennies are actually in circulation. The rest are lying under couch cushions, on the street, and some have even been thrown away, which was proved by a 2002 Gallup poll that should about 2 percent of Americans throw pennies away.

The only people who really seem to benefit from this is the Jarden corporation, who produce the small zinc disks that are used to make pennies and even they don’t really care that much. The sale of penny blanks only makes up part of Jarden’s sale of zinc. The Jarden Corporation only spends about $200,000 a year lobbying for bills that support the production of pennies. That is only a small chunk of change in the political spectrum.

Would getting rid of the penny produce a visible change for us everyday citizens? Not really, but then again, pennies don’t really make a difference in our lives right now. Studies have shown that people won’t take the time to bend down and pick up a penny. People literally step over U.S currency and don’t care, which is strange in a society that is so concerned with money.

If we got rid of the penny, the most reasonable thing to do would be to round payments up or down to the nearest nickel. This may seem like the customer will have to pay more, but really only by one or two cents (which if we were really that concerned about one or two cents we would have stopped to pick up the pennies off the ground). Studies, from 2006, have shown that when prices are rounded to the nearest nickel, it actually comes out in favor of the customer. Some companies have been doing this already, such as Chipotle did in 2012, and have really gone unnoticed. This rounding would only apply to cash transactions, not electronic ones that are the most popular.

America has stopped minting a coin before. The half-cent was retired from circulation in 1857 because of a rising problem with inflation (sound familiar?). And the result was that nothing really seemed to change, immediately or in the long-term. So if we decided to stop minting the penny now, what would be the deal?

A group called Americans for Common Cents has voiced their concerns against the elimination of the penny. The fear for the well-being of charities which seems irrelevant in an age where most donations are made electronically. Also, I am pretty sure people will be willing to part with their nickels and dimes which might lead to a minute increase in the charities profits. The organization is also composed of some of the lobbyists for the zinc producing Jarden Corporation, which might account for their enthusiasm about the penny.

That brings us to the next group of people who oppose the elimination of the penny, Lincoln enthusiasts. Their argument is that Lincoln was such an important part of our history that taking away the penny would tarnish his lasting legacy. Lincoln has been commemorated in a movie, a memorial, and every history book in America. I don’t think it will be anytime soon that someone forgets who Lincoln is and what he did; anyway, he is still on the five-dollar bill, that is not going anywhere anytime soon.

There are people fighting for the cause. They are called the "Citizens for Retiring the Penny." Their leader Jeff Gore states that $15 million is lost in the minting of pennies every year. This money could be going to better causes, such as paying off our debt, public education, public healthcare, or anything but making coins. But that would also mean Congress would have to agree on things, which they apparently can’t do on anything. One of the main supporters for the decrease in the use of the penny is Arizona State Representative, Jim Kolbe. He proposes that all prices be rounded up to the nearest nickel. His opinion may be biased on the fact that Arizona is rich in copper, the main material used for making nickels.

Obama has called the penny obsolete in our society and has said “it stands for a 'good metaphor' for some of the most frustrating aspects of government waste.” He expressed the view that maybe Americans are just a little to emotionally attached to the penny and this is hindering our ability to see its wasted opportunity cost.

The fact is a penny is not worth what it used to be; instead, it is actually costing the government money. Not a noticeable amount, but an easily traceable amount. The penny isn’t important anymore in American society. They are trinkets we toss in fountains to make a wish or put them into those machines that make them into collectibles. They have no practical use anymore. They cannot be used in vending machines, parking meters, or tollbooths; the places where people would most likely use a penny. By getting rid of the penny we could make progress in our government saving money and resources; because let's face it they are not going to do it in the areas that would truly make a difference.

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