[17], You cant buy anything for a penny; vending machines and parking meters wont accept them. The group that conducted that survey Americans for Common Cents advocates retention of pennies, but impartial polls have come up with similar results. U.S. Securities and Exchange Commission. Low rated: 2. Many people thought that 2009, the 100th anniversary of the Lincoln cent, should have been the last year of penny manufacture. 1943 pennies were made out of a mixture of steel and copper, due to the war effort during World War II. Top 3 Pros and Cons,", ProCon.org, "Should the Penny Stay in Circulation? Back in 1857, the U.S. Mint stopped producing half-cent coins which, according to the historical information calculator at MeasuringWorth.com, had a purchasing power of $0.15 in 2020 dollars. Also the penny is a big part . I will now list them and also describe them. Here are the proper bibliographic citations for this page according to four style manuals (in alphabetical order): [Editor's Note: The APA citation style requires double spacing within entries. Most recently, in 2017, Senators John McCain (R-AZ) and Mike Enzi (R-WY) sponsored ultimately failed legislation that would have suspended minting of the penny. Instance penny supporters claim that the penny still holds value and should be kept in circulation. 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. 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. To learn more, read our article on the possible economic impact of eliminating the penny. 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. 5. The C.O.I.N.S. The army don't think we even need the penny because it too heavy to travel. Pennies are so hard to spend that many people dont even bother they just store them all in jars, or even throw them away. 10 reasons why we should keep the penny. Also the United States loses 1.8 cents for every penny being made. Letting us know his views on keeping or eliminating the penny will help us determine how important or unimportant the penny is for us to keep or not keep. Supporters of the penny dont buy this argument. Will a suitable substitute be found? No, we can't, for some reason. At the time it was eliminated, the useless halfpenny could buy as much as 15 pennies can today. References to products, offers, and rates from third party sites often change. This argument pointing to honoring Lincoln has been enough to stave off elimination for years, with few anti-penny advocates willing to make this penny point in their arguments against it. The United States Mint makes over 20,000,000 pennies per day, or 7,000,000,000 pennies per year. Most US coins have an expected circulation life of 20 to 30 years, meaning a single penny could be used thousands or even millions of times. The pro-penny group backs up its claim by pointing to the work of economist Raymond Lombra. Illustration: The Spruce /Danie Drankwalter. 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. 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. Yes, the penny should stay in circulation as it is a reminder of our country's history and serves to keep the cost of goods low. More recently, a 2017 paper by economist Robert Shapiro estimated that each penny only gets used around twice per year, or 55 times over its lifespan. 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.. A second reason this should happen is that it is bad for the environment. Payments made with credit, debit, or old-fashioned checks are still settled down to the cent. Consider how you felt about the issue before reading this article. One-cent pieces account for nearly three-fourths of the coins now being made by the federal government and critics maintain that the Mints facilities and workforce could be used to better advantage, and much more profitably, by devoting them instead to higher-value coins that yield substantial profits. Act, which would stop the minting of the penny for ten years to assess the repercussions. As debate continues on both sides, let's explore 8 reasons why we should keep or eliminate it. Reduced coin usage linked to the pandemic has already had an impact. 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! It too had very little purchasing power at the end of its life. However, this only works if the coins actually do circulate and pennies, as noted above, often dont. Using your figures, that would amount to about 1000 ounces of copper. There's been a debate brewing over the value of the penny, and conversations have grown amid a national coin shortage. Theyre so hard to use that they end up stuffed in jars or abandoned on sidewalks. And if a single penny is useless, a whole bunch of pennies isnt much better. There are precedents for getting rid of coins that are too small to use. The mint produces billions of these coins every year. In June of this year, New York Times op-ed columnist William Safire wrote an article calling for the elimination of the penny. The American Council of Science and Health calculates that just transporting pennies to banks not even counting any of the other stages of their production put about 107 million pounds of carbon dioxide (CO2) into the atmosphere between 1982 and 2016. 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. A graduate of NYU, he has an MA in English literature and loves literature from all ages. [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. CGAA will not be liable for any losses and/or damages incurred with the use of the information provided. Top 3 Pros and Cons." 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. The cost of making pennies in 2019 was 1.99 cents per coin. (6) The penny has become useless as a means of exchange. No, dropping the Penny won't cost the government more. 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 few people groused about it, but commerce continued unabated. That means whenever the Mint produces a penny and sends it out to a bank, its losing money on the deal. You have it. Its possible that what happens to the penny could end up depending not on the law, but on decisions made by businesses. So can we do without the penny? However, the nickel is in just as bad a shape as the penny. 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. Unlock the Ultimate Benefits with the United 1K Guide! It's a Money Loser for You. 7 Reasons to Get Rid of the PennyIt's a Money Loser for the Government. You don't want to lose it. 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. 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). 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. 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. However, he also stresses that even if prices did increase, the difference would be so tiny it couldnt possibly affect the CPI. Anti-penny advocates are fond of pointing out that today, the penny costs taxpayers more to produce than its actually worth. (5) The United States should follow the lead of other countries and discontinue the penny, because it is obsolete and costs more than it is worth. A dollar coin can last up to forty years. Authority to discontinue pennies rests with Congress and so far, that august body has been gripped by indecision as it ponders conflicting arguments by lobbying groups on both sides of the issue. Dominic Townsend is a successful article author based in New York City. Another significant change in U.S. coinage occurred without any catastrophic effects on commerce. To save time at the register, some businesses have experimented with rounding all transactions to the nearest nickel. The general rarity of the $2 bill is compounded by the fact that many people hoard them. All rights reserved. According to Americans for Common Cents, this will lead to a rounding tax. In other words, stores will deliberately manipulate their prices to ensure transactions are always rounded up instead of down. Removing the penny would save taxpayers money and reduce unnecessary waste. [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. How Many Coins Are in a Regular Roll of Coins? However, new initiatives are being proposed to make the penny more efficient - read more to find out how! The very fact that pennies have so little value makes them useful to charities because people are happy to give them away. If the penny is discontinued, then merchants must round all prices. It doesnt matter. That would cost an estimated $10.9 million more annually than it would cost to keep making pennies. This not only weighs down our pockets, but it also holds up the line while we mess around counting out coins. Remember to focus on content rather than grammar or mechanics. Dominic is passionate about writing stories that have the power to make a difference in peoples lives. 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. While the one-cent, once-copper coin doesn't have the purchasing power it used to, Americans still have a hard time letting it go. The problem is, too many believe the present administration and government in D.C. is reasonable, when its actually FUBAR. The penny should be abolished because it costs more to produce than it is worth . Most Americans want to keep the penny. 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. Will todays cent get the same kind of reprieve? Although these arguments aren't based on factual evidence, there is something to be said for keeping the penny around. And in February 2014, President Barack Obama argued during a YouTube chat that pennies were obsolete and a symbol of U.S. government waste. Life Without Pennies. This question has been debated for years, with people arguing for and against its elimination. The discontinuation of the penny would require significant turnover. There has been a growing debate on whether we should keep the penny or let it go. To anti-penny advocates, thats a lot of costs for a coin that cant even buy a piece of gum anymore. 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. Preserving the penny keeps consumer prices down and avoids harming low-income households. In 1857, the half-cent had the purchasing power that would translate to well over ten cents today, so in some ways, it was akin to our eliminating the dime. News sources such as NPR began speculating whether the penny would finally be retired or if crypto possibilities might replace it. In the rare case you have never heard of or used a penny, it is the one cent coin in U.S. The melt value of pennies ranges from more than two cents for the pre-1982 copper . Maybe this is another consideration that the U.S. government should look at. However, in recent years, there has been much debate about whether or not we . Should the penny stay in circulation? 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. In 1962, it removed tin from the alloy, changing it from bronze to brass. Another piece of evidence against Lombras claims comes from Canada, which stopped minting its penny in 2013. 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. 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. 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. 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. They are good for societies that help with cancer, fundraiser, etc. If that is the case, then people would be less willing to part with spare change for charitable drives. In 2017 it cost the U.S. Mint 1.8 cents to make each penny and 6.6 cents for each nickel. In 1792, Congress created a national mint authorized to make gold, silver, and copper coins, including the one-cent piece known as the penny. The penny is an important part of our history and culture. The impact of the loss of the penny on price flexibility depends on its implementation. While we do our best to keep these updated, numbers stated on this site may differ from actual numbers. Getting rid of the penny would save time since customers wouldn't have to search for their nearest nickel and wait in long lines while customers ahead of them try to count out exact change. Chicago, Illinois 60654 USA, Natalie Leppard We're Moving Away from Currency. Eliminating the penny would mean taking away a significant part of his legacy, which many people consider unacceptable. After 1962, pennies were no longer made of copper or bronze but instead were minted from 97.5% zinc with 2.5% copper coating. 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.. The existence of pennies helps raise a lot of money for charities. [27], As a result of that extra time per transaction, the average citizen wastes 730 seconds a year (12 minutes) paying with pennies. Charities worry that if the nickel becomes the smallest denomination, then people will value change more. Why or why not? [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. Eliminating pennies would save time at the point of purchase without hurting customers or businesses financially. A cent that, most of the time, goes unused. Read more to learn about the potential benefits of eliminating the penny. 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. She holds a Bachelor of Arts in economics and international studies from Yale University. The Mint made nearly 6 billion pennies in 2012 and lost a cent on every single one of them. 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. [ 36 ] 6. How would removing pennies impact people who primarily rely on cash transactions? Top 3 Pros and Cons. Those little extra costs could add up quickly. Should the US government consider removing other coins from circulation as transactions become more digital? "Current Market." [1] Thats a bargain for how many times it gets used. Copper, which makes up the other 2.5 . The penny has been around for centuries, but it may be time to say farewell. MAKE JEWELRY. Pennies don't last forever, and the US Mint explains that the copper surface can corrode away after a few years. Since 2006, Jarden has given $1.2 million to Americans for Common Cents (ACC). For obvious reasons, pressure to keep the cent has been applied persistently by providers of zinc and copper, the two component metals in the coin, who would lose contracts worth tens of millions of dollars every year if pennies were abolished. 16, 2015, United States Mint, "Fun Facts Related to the Penny," usmint.gov (accessed July 2, 2018), APMEX, "The 1909-S VDB Lincoln Cent the King of Lincoln Cents," apmex.com (accessed July 2, 2018), United States Mint, "History," usmint.gov, June 19, 2018, Jennie Cohen, "10 Things You Didn't Know about the Penny," history.com, Mar. People will start rounding up to five cents. 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. Steel and aluminum are two alternative metals that have been mentioned. We strive to write accurate and genuine reviews and articles, and all views and opinions expressed are solely those of the authors. 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. According to the Royal Mint, there are 11,430m 1p coins (worth 114.29m) and 6,714 2p . And as it grows ever easier for charities to accept donations electronically, coin drives are likely to play a diminishing role in fundraising. Commerce continued without any major hiccups, even though the one-cent copper coin suddenly shrunk from a hefty, over an inch in diameter piece of copper that weighed almost 11 grams, to a penny that was less than half the weight and 40% smaller. Please refer to the appropriate style manual or other sources if you have any questions. This article was published on July 2, 2018, at Britannicas ProCon.org, a nonpartisan issue-information source. This means users can store and transact with their coins without interference from third parties such as banks or governments. Every year charities like the Lymphoma Society and Ronald McDonald House raise funds through penny drives, encouraging people to donate their unwanted pennies. They support keeping the penny because pennies represent the most expendable part of pocket change. In 2017 it earned almost $400 million in profits producing circulating coins. The arguments for halting production of pennies basically boil down to the idea that theyre more trouble than theyre worth. Pennies today are worth almost nothing, but they still cost money to produce and consume vast quantities of natural resources. 3. But others have a vested interest in keeping the penny alive. If we don't have the penny. Overall, continuing the use and manufacturing of pennies . 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. Accessed Oct. 21, 2020. Mark Weller is ACC's executive director. The less a person makes the more the saying "every penny counts" rings true. For one thing, consumers benefit from having the penny. 4. The government accountability office reported in 2017 that roughly two-thirds of pennies dont circulate, meaning they are sitting in storage and losing their value over time. Many anti-penny advocates think the ideal solution to this problem is to eliminate the nickel as well, making the dime the smallest coin in circulation. [3], For more on US currency, explore Currency and the US Presidents.. As the U.S. Mint faces the prospect of having to find more cost-effective compositions from which to make the nation's coinage, the debate about the continued existence of the humble penny is sure to carry on. There have been several other minor changes in the coin metal composition. Would love your thoughts, please comment. Baby boomers may nostalgically reminisce of a time when the penny was king, but economist Henry Aaron of the Brookings Institution and other nonprofit research groups argue that the penny's time has come and gone. [4] Several unsuccessful legislative efforts have sought to bring about the pennys extinction. That will save Canadian taxpayers $11 million a year, our northern neighbors government reports. However, it is removed from circulation when tendered at a Canadian banking facility. Among other things, we may receive free products, services, and/or monetary compensation in exchange for featured placement of sponsored products or services. And since the Mint produces billions of pennies a year, the government loses millions of dollars annually in the process. With more consumers moving toward contactless payment methods, news sources from Fortune to NPR began asking: Is the penny finally on its way out? 10 reasons why we should keep the penny. Internal Revenue Service. Report this Content. To pay the exact amount, we have to either hand over some pennies or receive some in change. 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. The ubiquitous one-cent coin has been a part of our everyday lives for over two centuries - and some argue that it's time to get rid of it. The use of cryptocurrency for small payments such as the penny could revolutionize how people manage their finances, allowing them to make quick, secure purchases without worrying about currency conversion rates or transaction fees. Citizens to Retire the U.S. Penny cites a study done by Walgreens and the National Association of Convenience Stores showing that handling pennies adds an average of two seconds to each cash transaction. If we keep the penny we would get more taxes over time. However, it doesnt say what those reasons are. In theory, a single penny could be used for hundreds or thousands of transactions before it drops out of circulation. Yes, abolishing the penny is worth considering. The US Mint produces coins as instructed byCongress, so a law would have to be passed by Congress and signed by the President in order for pennies to be removed from circulation. One of the biggest reasons that you should donate is to remove poverty from the world. [11] In 2009, the Leukemia and Lymphoma Society announced that school children had collected over 15 billion pennies in support of its charitable work thats $150 million dollars for blood cancer research and treatment. Feb 7, 2014, 08:12 AM EST | Updated Dec 6, 2017. Economist Henry Aaron of the Brookings Institution, a nonprofit research group, reminisces in a 2013 anti-penny screed about paying a nickel for an ice cream cone as a boy. Eliminating the penny, they argue, would be disrespectful to his memory. Some are opposed to change, and others are attached to the penny for sentimental reasons. Even the US Mint admits that the cost of producing a penny in 2007 could be as high as 1.4 cents. Last year, almost 60% of the coins that the U.S. Mint churned out were . Millions of pennies are produced every day and sent out all over the country. Without pennies, the Mint would be forced to make more five-cent pieces. For people making over $100,000 those few extra cents don't matter. Analyze the pro argument of Mark Weller from Americans for Common Cents. This organization has conducted polls showing that more than two-thirds of Americans favor keeping the penny. Rather than drop the practice completely, however, the stores decided to simply round all bills down to the nearest $0.05 instead. The Indian Head cent endured for half a century before its design was replaced by the Lincoln portrait in 1909, the 100th anniversary of the 16th Presidents birth. The reason that we should continue the production of pennies is because the citizens of the United States do not deserve more change than is needed. But whether or not you believe picking up that penny will bring you luck, one thing it definitely wont bring you is wealth.