The penny debate gained renewed attention when the coronavirus pandemic led to a nationwide coin shortage as consumers moved towards contactless payment methods. Finally, small-change drives arent a cost-effective way for charities to raise funds. Why or why not? [15], Common Cents, a nonprofit based in Dallas, TX, has run a Pennies from the Heart program for 20 years, and the student-led efforts have raised over $850,000 for local charities. At this rate, the United States loses millions of dollars producing pennies and nickels. 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. Push for the position and policies you support by writing US national senators and representatives. The penny is no longer a useful form of currency and its continued existence is costing the US government money. Supporters of the penny dont buy this argument. Charities such as the Leukemia and Lymphoma Society and Ronald McDonald House raise funds through penny drives, encouraging people to donate their unwanted pennies for important causes. Crypto possibilities are coming into play as more and more businesses accept digital currencies as payment. And in 1982, it virtually reversed the percentages of zinc and copper, in the process reducing the weight of the coin to its present 2.5 grams. Cryptocurrencies provide users with an alternative form of money that is not controlled by any government or bank, but is instead based on blockchain technology. 3. The penny is an interesting coin to discuss. [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. We're talking about those insignificant one cent pieces in your pocket or purse. It takes energy to extract the zinc from the ore, roll it out, stamp it into coins, and transport the coins to banks. This means users can store and transact with their coins without interference from third parties such as banks or governments. To access extended pro and con arguments, sources, and discussion questions about whether the penny should stay in circulation, go to ProCon.org. The $2 bill, however, might be making a comeback. The people who make less than $35,000 dollars a year need pennies. Copyright 2023 AMAC, Inc. / AMAC Senior Resources Network. 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. Anti-penny advocates are fond of pointing out that today, the penny costs taxpayers more to produce than its actually worth. A study by Walgreens and the National Association of Convenience Stores found that pennies add 2 to 2.5 seconds to each cash transaction. It too had very little purchasing power at the end of its life. Several unsuccessful legislative efforts have sought to bring about the pennys extinction. Should we keep the penny. 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. Whats less clear is why Americans are so committed to a coin with so little monetary value. In 2020, the Mint shipped out more pennies than nickels, quarters, and dimes put together over 8 billion coins. Creating the penny releases C02 into the air. Aside from its Lincoln portrait, though, it has undergone a number of major changes in design and composition. Despite what the old song says, pennies don't really come from heaven. The rust should come right off! Please refer to the appropriate style manual or other sources if you have any questions. Several Chipotle restaurants tried this in 2012, but customers who had extra cents added to their bills complained. 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). However, it is removed from circulation when tendered at a Canadian banking facility. All prices would have to be rounded to the nearest nickel. If 77.1% of you voted to keep the penny in our 1st poll I bet we can . [36], 6. procon@eb.com, 2023 Encyclopaedia Britannica, Inc. It's a Money Loser for Retailers. 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. 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. All rights reserved. Management decided that losing a cent or two on most transactions was better than having long lines of customers waiting for change. 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. A zinc penny weighs 2.5 g. Doing the math, 327 billion pennies weigh 1.8 billion pounds 10 reasons why we should keep the penny . Since 2006, Jarden has given $1.2 million to Americans for Common Cents (ACC). Millions of pennies are produced every day and sent out all over the country. 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!!!! He has written for many top publications, such as The New Yorker, Huffington Post, and The Wall Street Journal. 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. We also share information about your use of our site with our social media, advertising and analytics partners. In June of this year, New York Times op-ed columnist William Safire wrote an article calling for the elimination of the penny. Four decades ago, the Mint made more than 1.5 million prototype aluminum cents during a similar crisis, with every expectation they would soon see use in circulation. Those little extra costs could add up quickly. Ironically, getting rid of it might actually make it more difficult for people to donate money since fewer coins would be available. 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. In 1962, it removed tin from the alloy, changing it from bronze to brass. In 1857, the U.S. Mint stopped making the half-cent coin, partly because the cost of making it had exceeded its face value, and somewhat because it was considered to be too small a denomination and it was no longer needed. Of course, spending $0.018 to make a coin thats worth only $0.01 isnt necessarily a bad idea because coins are reusable. The penny, a one cent coin, costs 2.41 cents to make, which is nearly 1.5 times what it's worth (source 1). In his spare time, Dominic enjoys running along the Hudson River and exploring the citys art galleries.He is also heavily involved in numerous charities and volunteer efforts throughout the city. The decision to discontinue it would incur political backlash. 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. In 1856, the weight was further reduced to 2.49 g. In 1873, the weight was increased to 2.50 g where it remained until silver was eliminated from all coins in 1965. The content on Money Crashers is for informational and educational purposes only and should not be construed as professional financial advice. Anti-penny advocates scoff at this argument, pointing out that Lincoln would still remain on the $5 bill, which is actually useful to consumers. There are multiple upsides as well as downsides to America discontinuing minting the penny. If the penny is discontinued, then merchants must round all prices. In his spare time, Dominic enjoys running along the Hudson River and exploring the citys art galleries. Pro-penny groups argue that even if pennies seem worthless, they actually add up to hundreds of millions of dollars in charitable donations each year. 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. Even the US Mint admits that the cost of producing a penny in 2007 could be as high as 1.4 cents. Learn how to pay for IVF with these strategies for fertility financing. The Mint made nearly 6 billion pennies in 2012 and lost a cent on every single one of them. It cost 2.4 cents to make the penny. However, it could be biased because of the differences between segments of the population that pay electronically and with cash. 3. Eventually, this reduced demand will result in fewer pennies being minted each year. She has written about personal finance and shopping strategies for a variety of publications, including ConsumerSearch.com, ShopSmart.com, and the Dollar Stretcher newsletter. 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. In fact, during that year the Mint accidentally made 40 copper pennies! The cost of making pennies in 2019 was 1.99 cents per coin. (4) Considering that the penny has virtually no purchasing power, it does nothing except add unnecessary weight to our pockets and purses. The composition of the coins consisted of an outer shell made out of 75% copper and 25% nickel bonded to a core of pure copper. 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. Post date: 20 yesterday. "Should the Penny Stay in Circulation? 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. 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. You can easily get rust off a penny using vinegar and salt. Act is still in committee. That means whenever the Mint produces a penny and sends it out to a bank, its losing money on the deal. Currently, the cost to make a penny is around 1.82 cents. Feb 7, 2014, 08:12 AM EST | Updated Dec 6, 2017. It's a Money Loser for You. Franklin is also credited with the saying, A penny saved is a penny earned. [35], 3. People think we should not make pennies because they cost 2 cents to make. After reading the pros and cons on this topic, has your thinking changed? In fact, it has been struck in greater numbers than all other coins combined including not just U.S. coins but the coins of all other countries throughout recorded history. So instead of penny drives, charities could start holding nickel drives, putting out bottles or wishing fountains to collect the new useless coins. Susan Headley is a well-respected coin collecting expert and writer with over 30 years of hands-on numismatic experience. It's clear that the modern penny is no longer necessary in our financial system. As debate continues on both sides, let's explore 8 reasons why we should keep or eliminate it. 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. In Grey's video, he notes that in 2006, even with pennies only 5 percent copper and 95 percent zinc, "the value of copper rose to more than the value of the penny, meaning they were worth more . 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. According to the Royal Mint, there are 11,430m 1p coins (worth 114.29m) and 6,714 2p . Removing the penny removes grades of information that could be available to investors, consumers and manufacturers. Theyre so hard to use that they end up stuffed in jars or abandoned on sidewalks. 4. Overall, continuing the use and manufacturing of pennies . In 2017 it earned almost $400 million in profits producing circulating coins. -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. Mark Weller is ACC's executive director. Should the US government consider removing other coins from circulation as transactions become more digital? The process of making pennies is costly both financially and environmentally. 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. In addition, zinc is toxic in high doses and small amounts can contaminate water and soil in the area surrounding ore roll producing pennies. For these types of payments, rounding to the nearest nickel would cost consumers an extra 2021 dollars annually. 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. What Are Elastic, Unitary and Inelastic How to Approach Change in an Organization. What Is a Financial Statement Restatement? There will be no sanity in D.C., fiscal or otherwise, until a electoral majority recognizes there is a crisis and places people in office wholl effect a cure. Along with the zinc, the ores usually contain other metals, including toxic metals like cadmium and lead. These adjustments are not costless, so there is resistance from some parties who do not want to pay transition costs. The United States should get rid of the penny because it is people are not using them, cost to much, and other countries have already dropped the penny. However, it would hit low-income Americans especially hard. "Microcap Stock: A Guide for Investors." The melt value of pennies ranges from more than two cents for thepre-1982 copper pennies, to nearly a full cent for the copper-plated zinc pennies. By clicking Accept All Cookies, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. Vending Machines Don't Want Them. The very fact that pennies have so little value makes them useful to charities because people are happy to give them away. First of all, if the U.S. Mint stops producing pennies, they wont simply lose their value overnight. If you pay with credit or debit card, it is $7.12. In 2010, it cost 1.67 cents to produce each penny. News sources such as NPR began speculating whether the penny would finally be retired or if crypto possibilities might replace it. However, it doesnt say what those reasons are. A graduate of NYU, he has an MA in English literature and loves literature from all ages. One of the functions of prices is to provide participants in the economy with information about the scarcity, supply and demand for a particular good. [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. Many detractors, tell me what a detractor is, argue that the penny costs more than its face value to . The folks who want to retire the penny also have some compelling arguments, including those below. This question has been debated for years, with people arguing for and against its elimination. [4] Several unsuccessful legislative efforts have sought to bring about the pennys extinction. And nickels cost 10 cents to make. According to Trading Economics, the inflation rate in Canada since the changeover has wavered between a high of around 3% and a low of negative 0.5%. How would removing pennies impact people who primarily rely on cash transactions? 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. Pennys also teach kids about money like there 1, 5, 10, 25, and dollars bills if we didn't have the penny they wouldn't even know what they penney is an advanchley we would forget about . Eliminating the penny, they argue, would be disrespectful to his memory. Sign up for more easy craft ideas, fun hobbies, and DIY projects, Lincoln Wheat Penny Key Dates, Rarities and Varieties. 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. In 1959, the 150th anniversary of Lincolns birth, this wheat-ears reverse gave way to a likeness of the Lincoln Memorial. She is a member of the American Numismatic Association (ANA) and holds several certifications. 10 reasons why we should keep the penny. 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. Some say the United States should stop using pennies because the cost of producing the coin is now higher than the value of the coin. 30, 2012, Army & Air Force Exchange Service, "Retail & General FAQs," aafes.com (accessed July 2, 2018), David Kestenbaum, "What Is Seigniorage?," npr.org, Jan. 9, 2009, Business Wire, "Strong Support for the Penny in Recent Poll," businesswire.com, Apr. However, other arguments are sentimental, having to do with the way people feel about the coin. 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. Chipotle restaurants have already taken this initiative by simply rounding bills off to the nearest nickel, but when management decided to do this some customers complained about paying extra cents added on their bills. The discontinuation of the penny would require significant turnover. 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. All rights reserved. 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. [ 34 ] 5. She holds a Bachelor of Arts in economics and international studies from Yale University. To anti-penny advocates, thats a lot of costs for a coin that cant even buy a piece of gum anymore. 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. Top 3 Pros and Cons." Although originally made of pure copper, pennies today are composed of 97.5% zinc and 2.5% copper. But if we get rid of the penny we would have to stick with the nickel. But without its namesake coin, many of these penny points saw a significant drop-off in donations - as much as 90%, according to one group that doesn't provide further details. List two to three ways. [28] Harvard economist Greg Mankiw says that this wasted time costs the US economy around $1 billion annually. 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). 9 " Centsible " Reasons to Get Rid of the Penny. The debate over whether or not to get rid of the penny has been going on for years. In 2017, Senators John McCain and Mike Enzi introduced S.759 Currency Optimization, Innovation and National Savings (or C.O.I.N.S.) Since the penny costs 0.26 more than face value to The mint produces billions of these coins every year. 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. According to CNN, the Mint has researched the possibility of making pennies from cheaper materials, but it could not find a way to bring the cost of producing them below their face value. Here are both re. Will a suitable substitute be found? [31][32][33], 2. Faced with a similar sea of red ink, Canada stopped making cents in May 2012. 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. [22], At a total per unit cost of 1.82 cents, it costs nearly two pennies to make one penny. Less than forty years later, the mint reduced the weight to 2.67 g and used a composition of 90% silver. Some stores are even refusing to accept cash altogether. To pay the exact amount, we have to either hand over some pennies or receive some in change. 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. The United States should continue the production of the penny. The cost of producing them is higher than face value. 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. The group that conducted that survey Americans for Common Cents advocates retention of pennies, but impartial polls have come up with similar results. When people start leaving a monetary unit at the cash register for the next customer, the unit is too small to be useful. [19] Former US Mint Director Philip Diehl said, [T]he value of a penny has shrunk to the point that, if you earn more than the minimum wage, youre losing money stopping and picking up a penny on the sidewalk. [20], Comedian John Oliver noted, Two percent of Americans admitted to regularly throwing pennies in the garbage, which means the US Mint is spending millions to make garbage. [21] Two-thirds of the billions of pennies produced are never seen in circulation again once they reach a consumer via the bank. Remember, pennies cost 2 more than how much their worth, while nickels cost 5 more than the nickel is worth.