Should America get rid of the penny? The reasons why it should also apply to nickels, dimes, and $1 coins. The reasons why it shouldn't are mainly emotional and based on the penny's long history.
10 Reasons to Get Rid of the Penny
The 10 reasons to get rid of the penny are either practical or financial. They are logical but require a change.
Congress must enact a law that eliminates the penny from circulation. It must also direct the U.S. Mint, a bureau of the U.S. Treasury, to stop producing them.
Check out the best 10 reasons why the penny should get the ax:
- Pennies don't buy as much as they used to. In 1913, a penny purchased what a quarter does today. Inflation has eaten away at the U.S. standard of living.
- Producing the penny costs taxpayers money and adds to the national debt. In 2018, the penny cost 2.06 cents to make and distribute. The actual production is 1.78 cents, admin costs are 0.25 cents, and distribution to Federal Reserve banks costs 0.03 cents. In 2019, the U.S. Mint made 7.04 billion pennies, costing taxpayers $145 million.
- Pennies are made of zinc and copper. Zinc mining has a negative environmental impact. It leaches into the surrounding soil and streams, and gets into the food stream and could cause health concerns.
- Most of the zinc for penny manufacturing is imported from China. In 2019, it added $1.1 million to the $345 billion U.S. trade deficit with China.
- Pennies are heavy to carry around. Each one only weighs 2.5 grams. But a $1 bill weighs 1 gram.
- Americans throw away $62 million in coins each year. Most of it disappears in sofas or is lost on the street. But 11% of Americans report they would rather throw a penny away then bother to carry it around.
- Pennies take up time at the cash register to count out. If time is money, then pennies are not worth the time it takes to handle them.
- The use of cash in retail transactions continues to steadily decline. In 2018, cash was used for just 26% of transactions. That's down from 30% in 2017. Debit cards top the list as the most used payment instrument, accounting for 28% of payments.
- The U.S. military has already eliminated the penny on its overseas bases. It uses disc-like certificates called POGs. Its lowest denomination is the nickel.
- Federal minimum wage is $7.25 an hour. It would take approximately five seconds of work to earn a single cent. If you took longer than that to pick up a spare penny on the ground, your effort would be earning less than minimum wage.
Three Reasons to Keep the Penny
On the flip side, slightly more than half of Americans are emotionally attached to the penny. A poll by Yougov.com found that 51% of Americans were in favor of keeping it. More than a third (34%) would be disappointed if the government stopped making pennies, and another 9% would be downright angry.
Many Americans are penny-pinchers. When surveyed, 71% said they pick up pennies they see on the ground.
More than half take their pennies when offered as change. Only 39% leave them in the "give a penny, take a penny" dish offered by some retailers.
Another poll found that 77% worry about the rounding tax. They assume that, if the penny were eliminated, businesses will round up to the nearest dollar. A 2001 study by Pennsylvania State University estimated that it could cost consumers about $600 million per year, but a Wake Forest University study found there would be no change. The study took sales taxes and other factors into account. The military also found there was no rounding tax. Businesses either rounded up or down to the nearest nickel.
Many have an emotional connection to the penny because of its history. It's been in circulation since 1793, and it has borne Abraham Lincoln’s face since 1909.
History of the Penny in the United States
The penny started as pure copper. But copper prices were rising. In 1857, the U.S. Mint added nickel to the copper to cut costs. In 1864, it switched to tin and zinc instead of nickel.
In 1943, pennies were made of zinc-coated steel. Copper had become essential to the war effort during World War II.
The Mint accidentally made 40 copper pennies. It happened when copper-alloy blanks remained in the press hopper when production began on the new steel pennies. The record amount paid for a 1943 copper cent was $82,500 in 1996.
In 1962, pennies were no longer made with tin. In 1982, the penny was made of 97.5% zinc with only 2.5% copper. At 2.500 grams, it weighs more than a dime.
Should Other Coins Be Eliminated?
Many of the reasons for eliminating the penny apply to other coins as well. Inflation has destroyed the value of nickels and dimes as well as pennies. We could easily get rid of pennies, nickels, and dimes and be no more inconvenienced than the average person in 1913. Their lowest coin could buy what the quarter does today.
Our pockets would be lighter by not having to make the additional change. Time spent at the register would be less without having to count out dimes, nickels, and pennies.
If cost were the only issue, then nickels should be eliminated as well. They cost 7.53 cents to produce and distribute. Nickels cost the taxpayer $30.3 million in total. Dimes only cost 3.73 cents, while quarters are just 9.01 cents. They added $424 million, which the government uses to pay down the U.S. debt.
If Congress ever eliminates coins, it should consider the $1 coin. In 2005, Congress created a new series of $1 coins commemorating U.S. presidents. The United States is the only developed country that still uses $1 bills. But they wear out after a year or so. On the other hand, $1 coins can last 30 years.
Americans prefer to carry $1 bills. In 2011, U.S. Treasury Secretary Tim Geithner suspended $1 coin production because no one wanted them. So the Federal Reserve has stockpiled them. By 2013, it accumulated $1.4 billion worth.