[7] Raymond Lombra, Professor of Economics at Pennsylvania State University, says the extra rounding charges would exceed $600 million annually and would be regressive, affecting the poor and other disadvantaged people groups disproportionately. [9], One study found that penny rounding in Canada costs grocery store customers an estimated 3.27 million Canadian dollars (2.5 million USD) annually. Although originally made of pure copper, pennies today are composed of 97.5% zinc and 2.5% copper. [36], 6. The composition change also meant that Pennies became lighter; before 1982 they weighed 3.11 grams compared to only 2.5 grams after 1982 and about 2500 grams for one dime (2268 grams). Should we keep the penny Rating: 4,5/10 932 reviews The United States penny, or one-cent coin, has been in circulation for over two centuries and is a longstanding symbol of American currency. And in 2010, the Mint introduced a permanent new reverse depicting a Civil War-era Union shield. In 2017, Senators John McCain and Mike Enzi introduced S.759 Currency Optimization, Innovation and National Savings (or C.O.I.N.S.) If only cash transactions are affected, then electronic transactions will continue to deliver more sensitive data. This is why anti-penny advocates argue that its a bad idea to keep making them when the mint loses money doing so, while other coins like nickels cost less to make but have higher value. [10][11] So what if it costs 1.8 cents to make? 1. The Mint made nearly 6 billion pennies in 2012 and lost a cent on every single one of them. Removing the penny would save taxpayers money and reduce unnecessary waste. Consider how you felt about the issue before reading this article. 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. Charities benefit from spare change because, since people do not care about it, they are more likely to give it away. It doesnt matter. In 2010, it cost 1.67 cents to produce each penny. Last year, almost 60% of the coins that the U.S. Mint churned out were . A nonpartisan organization called Citizens to Retire the U.S. Penny has attracted the support of economists from Harvard and Wake Forest University. You don't want to lose it. Copper, which makes up the other 2.5 . Cash transactions there are now rounded up or down to the nearest $0.05. The process of making pennies is costly both financially and environmentally. Nice article, but we need to focus on the true high cost issues that will have a meaningful and measurable impact on getting our fiscal house back in order. Both sides in the penny debate make some good points, and the solution is far from being an easy decision. Are culture would be forgotten shops prices . Producing the penny costs taxpayers money: In 2021, each penny produced cost 2.10 cents to make and distribute. He argues that there are three main reasons for keeping the penny: Without it, we would become more reliant on the . A study by Walgreens and the National Association of Convenience Stores found that pennies add 2 to 2.5 seconds to each cash transaction. Faced with a similar sea of red ink, Canada stopped making cents in May 2012. Copyright 2023 AMAC, Inc. / AMAC Senior Resources Network. A HuffPost/YouGov poll conducted in January found that only 34 percent of Americans are in favor of eliminating the penny, while 51 . A lot of pennies never get spent. Accessed Oct. 21, 2020. Removing the penny removes grades of information that could be available to investors, consumers and manufacturers. After reading the pros and cons on this topic, has your thinking changed? Accessed Oct. 21, 2020. 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. Economist Greg Mankiw of Harvard University argues that if people start leaving pennies at cash registers due to their lack of purchasing power (in 2020 dollars, 15 pennies would be worth one monetary unit), then maybe then the useless halfpenny will finally be stamped out too. "Open an IRA in 15 minutes." Why or why not? Treasury officials reasoned correctly, it turned out that by then, Americans had developed enough confidence in their government to accept base-metal coins, quite literally, at face value despite their reduced intrinsic value. This cost includes the metal content and the labor used to produce them. According to the 2020 Annual Report from the U.S. Mint, it now costs about $0.018 or 1.8 cents to make one cent. Americans for Common Cents: The Penny's Importance For Charity, Foldvary Says Keep the Penny; Dump the Sales Tax, US Mint Cost to Produce the Penny and Nickel, Americans for Common Cents: Support for the Penny. Eliminating the penny, they argue, would be disrespectful to his memory. Explain your answer(s). I was recently given over 10000 wheat back Lincoln Cents for a YN program we run through the Pennsylvania Association of Numismatists. Get tips on managing costs, finding financial assistance & more! Want to learn more? All rights reserved. Discover what happens, how to avoid it, and what you can do if it's too late. Anti-penny advocates are fond of pointing out that today, the penny costs taxpayers more to produce than its actually worth. We strive to write accurate and genuine reviews and articles, and all views and opinions expressed are solely those of the authors. Furthermore, since crypto coins are divisible into smaller amounts than fiat currency, it would be easier for people to pay for items in exact amounts rather than rounding up or down to the nearest full denomination. So instead of penny drives, charities could start holding nickel drives, putting out bottles or wishing fountains to collect the new useless coins. In 2010, it cost 1.67 cents to produce each penny. According to the Royal Mint, there are 11,430m 1p coins (worth 114.29m) and 6,714 2p . 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.. Yes, abolishing the penny is worth considering. And as it grows ever easier for charities to accept donations electronically, coin drives are likely to play a diminishing role in fundraising. The United States Mint makes over 20,000,000 pennies per day, or 7,000,000,000 pennies per year. The US Mint shipped 8.4 billion pennies for circulation in 2017, more than all nickels (1.3 billion), dimes (2.4 billion), and quarters (1.9 billion) combined. [34], 5. The penny has been around for centuries, but it may be time to say farewell. Most Americans probably dont even realize that for more than 30 years, their pennies have been 97.5 percent zinc, with a thin copper plating to give them the illusion of being red cents with high copper content. 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? That would cost an estimated $10.9 million more annually than it would cost to keep making pennies. ], ProCon.org, "Should the Penny Stay in Circulation? The U.S. Mint reports that it costs nearly 1.6 cents to product one single cent (Grenoble, 2013). It takes energy to extract the zinc from the ore, roll it out, stamp it into coins, and transport the coins to banks. Should the US government consider removing other coins from circulation as transactions become more digital? 2023 Leaf Group Ltd. / Leaf Group Media, All Rights Reserved. Their reasons differ. They argue that eliminating it could hamper charities and fundraising efforts, as people feel more generous when they have coins to give away. [27], As a result of that extra time per transaction, the average citizen wastes 730 seconds a year (12 minutes) paying with pennies. They're Bad for the Environment. Franklin is also credited with the saying, A penny saved is a penny earned. [35], 3. ProCon/Encyclopaedia Britannica, Inc. 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. 9 " Centsible " Reasons to Get Rid of the Penny. All information published on this website is provided in good faith and for general use only. [12], Pennies and nickels both cost more to make than their face values, but on average over the last five years, nickels have been made at a loss of 2.58 cents per coin, compared to .65 cents per penny. If we don't have the penny. http://www.moneycrashers.com/get-rid-penny-reasons/Are you in favor of getting rid of the penny? The cost of pennies is a minor problem. However, new initiatives are being proposed to make the penny more efficient - read more to find out how! Numerous Americans are in favor of keeping it due to sentimental value, while others say it is just too costly. For example, the mint made the first dime in 1796 that weighed 2.7 g and had 89.24% silver. The U.S. One Cent coin, or penny, has almost no purchasing power today. The army don't think we even need the penny because it too heavy to travel. However, 59% of adults polled between June 10 and June 16 of 2004 by Harris Interactive said that they . 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. She holds a Bachelor of Arts in economics and international studies from Yale University. The cost of producing them is higher than face value. Amy Livingston is a freelance writer who can actually answer yes to the question, "And from that you make a living?" The penny is an essential part of our nation's monetary system, and it helps to keep commerce flowing smoothly. Some penny supporters believe that we should keep the penny out of respect to our country's history and 16th President, Abraham Lincoln, who was the first person to appear on a U.S . There have been several other minor changes in the coin metal composition. The total amount doesn't end when coins and citizens are debating the penny and whether or not it should be kept. . For all its current problems, the penny has a long and proud tradition dating back to 1793, when one-cent pieces were the very first coins produced by the fledgling U.S. Mint. Pennies don't buy as much as they used to: In 1913, a penny purchased a little more than a quarter does today (about 28 cents). Crypto possibilities are coming into play as more and more businesses accept digital currencies as payment. But penny opponents point out that even if the Mint stops producing pennies, charities won't simply lose out - they'll gradually be pulled away as stores stop accepting pennies and consumers switch to other coins. Faced with a similar sea of red ink, Canada stopped making cents in May 2012. The debate over whether to keep the penny or discontinue it has intensified since the penny crossed the line of one-cent production cost per penny. In recent years, a debate on whether or not America should keep the penny has arisen. The penny costs an irrational amount of money compared to what it's worth. 12, 2012, United States Mint, "United States Mint 2015 Annual Report," usmint.gov, June 2016, Associated Press, "US Penny Campaign Benefits Blood Cancer Research," newsday.com, Feb. 10, 2009, University of Southern California, "The USC Penny Harvest Wrapped up Its Third Successful Year," communities.usc.edu (accessed July 2, 2018), Common Cents, "Non-Profits," commoncentsdallas.org (accessed July 2, 2018), Mary Hance, "Penny Drive Sets Record in Raising Money for Second Harvest," tennessean.com, Feb. 17, 2017, Vlogbrothers, "I HATE PENNIES!!!! The cent has served the nation well since then, and many Americans view it with affection a sentiment that has grown even stronger since the coin began featuring the likeness of Abraham Lincoln in 1909. At a time when federal spending is under intense scrutiny, this strong public support seems somewhat surprising, for analysts say it now costs the U.S. Mint two cents double face value to make a single penny. Although originally made of pure copper, pennies today are composed of 97.5% zinc and 2.5% copper. Often, when we pay with cash at a store, the total amount doesnt end in a multiple of $0.05. Pennies are no longer made from pure copper . It too had very little purchasing power at the end of its life. Top 3 Pros and Cons. Creating the penny releases C02 into the air. Eliminating the Penny Reflect: Freewrite Now that you've had a chance to read, review, and reflect on "The Penny Debate," record your thoughts and feelings about whether to keep or eliminate the penny. 6.9 Reasons Why America Should Get Rid of the Penny - The Balance. Most recently, in 2017, SenatorsJohn McCain(R-AZ) andMike Enzi(R-WY) sponsored ultimately failed legislation that would have suspended minting of the penny. There are many anti-penny advocates that scoff at its existence, arguing that it costs more to mint pennies than the coins are worth. What Is a Financial Statement Restatement? TD Ameritrade. Although the cost for printing a dollar bill is about five cents, only lasts an average of eighteen months. [12], Organizations such as the Leukemia and Lymphoma Society, the Salvation Army, and the Ronald McDonald House ask people to donate pennies to raise funds. In Canada, at least, eliminating the penny has not led to a widespread increase in prices. 2. The Mint made nearly 6 billion pennies in 2012 and lost a cent on every single one of them. We may have financial relationships with some of the companies mentioned on this website. Pennies are worth so little now that by taking five seconds to pick one up, youre earning just $7.20 an hour less than the federal minimum wage. The penny debate gained renewed attention when the coronavirus pandemic led to a nationwide coin shortage as consumers moved towards contactless payment methods. The only real muscle the electorate has is the vote. If your thoughts have not changed, list two to three ways your better understanding of the other side of the issue now helps you better argue your position. We can not guarantee its completeness or reliability so please use caution. If more businesses follow Chipotles example and start rounding down their bills, their customers will find themselves with fewer pennies in their pockets. For one thing, consumers benefit from having the penny. 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. [1] While countries such as Australia, Canada, and New Zealand have phased out their one-cent pieces, Harris Poll found that 55% of Americans are in favor of keeping the penny and 29% want to abolish it. We use cookies to personalise content and ads, to provide social media features and to analyse our traffic. Consumers using credit wouldnt be affected by this because their transactions could still be counted out to the cent. As the U.S. Mint explains, the copper surface of a penny accounts for only 2.5% of its metal content. First of all, if the U.S. Mint stops producing pennies, they wont simply lose their value overnight. To be fair, the current production cost is down from the 1.66 cents it cost in 2014, and the continuation of a years-long trend and efforts by the Mint to increase efficiency as well as . 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). References to products, offers, and rates from third party sites often change. shutterstock.com Around 8% of coppers are thrown in the bin every year. Source: Jeffrey Sparshott, The Penny Cost More to Make Than Its Worth, Again, Dec. 27, 2016, The US Mint shipped 8.4 billion pennies for circulation in 2017, more than all nickels (1.3 billion), dimes (2.4 billion), and quarters (1.9 billion) combined. However, a newer study published in 2007 by economist Robert Whaples in the Eastern Economic Journal contradicts Lombra's findings. 7 Reasons to Get Rid of the PennyIt's a Money Loser for the Government. Should you need such advice, consult a licensed financial or tax advisor. Many foreign nations have eliminated their most minor denominations with almost no impact on commerce or consumer confidence in the monetary system. [3], For more on US currency, explore Currency and the US Presidents.. One problem with this argument, according to penny proponents, is that if there were no pennies, the Mint would have to produce more nickels. Susan also belongs to the American Numismatic Society (ANS) and CONECA (error and variety coins club). Management decided that losing a cent or two on most transactions was better than having long lines of customers waiting for change. Economist Robert Shapiro estimated in a 2017 paper that it costs 55 times more to make pennies than the value of each coin itself. A 2006 Coinstar poll found that 33 percent of American men and 22 percent of American women do not value spare change. The current inflation rate is 3.2%, which is below its historical average, so it's unlikely that getting rid of the penny would cause any widespread increase in prices either. If we were to get rid of the penny, cash transactions would be rounded to the nearest nickel. All of this numismatic change took place without any significant problems. This organization has conducted polls showing that more than two-thirds of Americans favor keeping the penny. According to the American Council on Health and Science, penny accounts for 2.4% of all coins produced annually in the US with metal content including zinc ores that are hazardous to environment when released. The penny debate gained renewed attention when the coronavirus pandemic led to a nationwide coin shortage as consumers moved towards contactless payment methods. This means users can store and transact with their coins without interference from third parties such as banks or governments. 9. And since the Mint produces billions of pennies a year, the government loses millions of dollars annually in the process. Aaron notes in his Brookings Institution editorial that eliminating both pennies and nickels would round off all cash transactions to the nearest $0.10, making for easier math and less stuff in our pockets.. This change was likely an attempt to cut costs further as the cost of copper had risen again by this time. The nations earliest one-cent pieces aptly called large cents by collectors were big, bulky pure copper coins roughly the same size and weight as half dollars. A few people groused about it, but commerce continued unabated. " THE PENNY DEBATE" written by Brad Andrews explains to the readers the important points and reasons on why we should keep the penny and important points and reasons as to why we should get rid 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 alternative to the penny . In 2017 it cost the U.S. Mint 1.8 cents to make each penny and 6.6 cents for each nickel. Those little extra costs could add up quickly. Dont get rid of it! Why or why not? Let's take a look at the issues involved in the pro-penny and the anti-penny debate so that you can make up your mind about where you stand on this critical matter. Life Without Pennies. The decision to discontinue it would incur political backlash. Danielle DeLee began writing in 2010. Internal Revenue Service. 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. Penny supporters point out that if we get rid of the penny, all-cash transactions will have to be rounded off to the nearest nickel. There's been a debate brewing over the value of the penny, and conversations have grown amid a national coin shortage. No. Finally, small-change drives arent a cost-effective way for charities to raise funds. (4) Considering that the penny has virtually no purchasing power, it does nothing except add unnecessary weight to our pockets and purses. 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. From an economic standpoint, it simply doesn't make sense to continue producing these coins. NBC's Morgan Radford reports for Weeke. The production and use of the penny is no longer cost-effective, so it may make sense to eliminate it as a way to save money and resources. There are plenty of DIY penny jewelry ideas out there, including a bracelet, a lucky penny necklace, and a bejeweled ring. There are precedents for getting rid of coins that are too small to use. 1943 pennies were made out of a mixture of steel and copper, due to the war effort during World War II. You're saving it. At this rate, the United States loses millions of dollars producing pennies and nickels. 1. Abraham Lincolns face replaced an image of Lady Liberty on the penny in 1909, the 100th anniversary of his birth, making him the first real person featured on a regular-issue American coin. She is a member of the American Numismatic Association (ANA) and holds several certifications. The rust should come right off! 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. ", ProCon.org. Push for the position and policies you support by writing US national senators and representatives. OTC Markets. Proponents of the penny argue that shopkeepers would tend to round up, increasing prices. Learn how to keep it safe. Or should the U.S. keep it's smallest coin? Accessed Oct. 21, 2020. Among other things, we may receive free products, services, and/or monetary compensation in exchange for featured placement of sponsored products or services. Now put it to work for your future. Low rated: 2. Chicago, Illinois 60654 USA, Natalie Leppard
10 reasons why we should keep the penny