Let's Bury The Penny
Updated: Jul 12, 2019
One of my fondest childhood memories was my first coin collection given to me by Grandfather. It was something we bonded over and cherished. He wasn’t a devout collector who meticulously labeled all the coins he found, but over the years he squirreled away quite a few wheat pennies along with a fair number of pre-1964 silver coins found in pocket change. On my 9th or 10th birthday he gave me a set of Whitman coin folders and then proceeded to let me rummage through all his jars and bags of pre-1958 pennies to take the ones I needed to fill the book. I spent many hours laying on his basement floor, looking through the magnifying glass - It was good times.
It, therefore, pains me that today I join the chorus of people calling for our great government to take the very obvious step of eliminating the penny from circulation. According to U.S. Mint production records, there were close to 7.5 billion pennies produced in 2018, and just about everyone who is being honest would say that is close to 7.5 billion pennies too many. Many Americans, even low-income Americans simply discard the penny into a jar, or worse landfills, rather than be hassled with carrying it. The mantra “a penny saved is a penny earned” is a wonderful and deeply ingrained American slogan, but, in all honesty, the time it takes to count 1000 pennies is not even worth the time to cash in the $10 to most Americans. Think about that – it takes 1000 to get $10, 10,000 to get $100. It simply isn’t worth most people’s time as that is a lifetime of saving into a jar.
Even the purchasing power of the penny is now non-existent. Penny candy hasn’t existed since the 1960s. There is absolutely nothing that exists today that costs only $.01. Even a penny doesn’t cost a penny to make. As of 2018, it costs 1.54 cents to make a penny. So, think about it, and yes it essentially takes 1.5 pennies to manufacture 1 penny? By anyone’s estimation, the annual loss of $69 million per year by the United States Government should be considered a bad business model. As little as I care for the current Administration, this seems like something President Trump would whole heartily get behind. He always talks about his business acumen, and this might be the worst business decision currently perpetrated by the United States. One does not even need a business degree to see this is problematic.
Naysayers fear that the result will be the rounding of all transactions upwards. This ‘rounding tax’ would disproportionately affect the poor who are the ones most likely to engage in all cash transactions. They further contend that so many items end in the digit of ‘9’ that American consumers will end up on the losing end. However, that is simply not the case as what they fail to remember is that seldom do Americans purchase just one item, and they also forget to consider that sales taxes already change the final price on most items. In fact, while there are studies that do shop the opposite, most studies reveal that the rounding of transactions would have virtually no effect as the positive and negative transactions would simply balance out. If individuals are still worried, it could even be legislated that all rounding go down. On the surface, you may think businesses would object, but when balanced against the costs of handling money, companies could actually save in the long run. Most companies already prefer that employees handle as little cash as possible and larger companies even prefer electronic payments. The chance for theft and errors goes down the fewer times that cash is handled.
Perhaps, simple mathematics is not enough for you? There are still a few arguments left to go. Zinc, the primary metal in post-1982 pennies, has a great deal of toxic pollution as a by-product of its production. The largest supporter of the Penny comes from a company called Jarden Zinc in Tennessee. They happen to be the sole supplier of blank penny canvasses to the United States Mint and routinely lobby to keep the one-cent piece in production. Why wouldn’t they when they have a monopoly? Even more suspicious is the fact that many of the studies that support continued production of the one-cent piece are funded by their lobbying arm. By my rough calculation, they supply 8 million tons of zinc per year for penny production. That sounds like quite a bit and you may feel that if we stopped production that a whole score of Tennesseans would suddenly lose their high-paying jobs. If I wanted to sound Republican, I would say that the United States Government should not be subsidizing an industry that cannot turn a profit and they should be allowed to die. However, the situation would not even be that dire. Zinc is an important metal for commercial applications, namely wire coating. The U.S. produces 820 long tons of zinc annually which is only about 4-5% of the total world production. There is a worldwide demand for zinc but they want that easy money. They are just like any other corporation that wants to bleed Uncle Sam for all that it can.
Have you ever known a child to swallow a coin? In the past, it was no big deal and still usually is not. However, zinc pennies can be toxic if they do not pass. Unlike copper and silver, which are non-reactive in the gastrointestinal tract, zinc slowly breaks down and reacts to form hydrogen gas and zinc chloride. There have been medical cases of gastric ulcers in children because of zinc pennies. There are even articles in veterinarian magazines that document the dying of household pets because of swallowed pennies. I know that my dog, like many others, enjoys tasting everything. I would find it heartbreaking if he were to go to doggy heaven because a penny fell out of my pocket on the couch and he decided that it looked like a treat.
Elimination of a low denomination coin is not something that is unprecedented. Canada, Australia, New Zealand, and even Mexico, have eliminated their lowest denomination coins and the transitions were seamless in each of those countries. Even the United States at one time had a half-cent in production. Do you remember that? Of course not, because it was no longer of any use as Americans moved on to other coins. Legislation has been proposed numerous times in Congress and each time it fails to go anywhere. Do you want a compromise? Continue to produce the one-cent piece in proof and mint sets, or in commemorative coinage where the cost of production is less than the cost of the eventual sale. Corporate lobbying and the lack of Congressional vision are the only reasons the penny is still being produced. American’s love their penny, I know but now is the time to let it go.
There is an organization and a lobbying arm called ‘Citizens To Retire The US Penny.’ They have links to find your Representatives and template letters to print to them as to why the penny needs to end. There are many reasons for an individual to take an active role in governmental affairs and some would call this silly but for our government to save $69 million of our taxpayer dollars seems like a pretty good reason to me. We should expect our government to be able to make commonsense decisions. Also, if you are like me and have some nostalgia about the penny, do not worry, the United States government has produced a few hundred billion over the years. They will be turning up for a very long time.
For Further Information Please Read
Citizens To Retire The US Penny which is a lobbying group to eliminate the penny with a letter template to write to your local politicians - http://www.retirethepenny.org/take_action.html
This is a local politician finder for your address - https://www.commoncause.org/find-your-representative/
Former Mint Director's Opinion - https://www.cnbc.com/2015/12/30/its-time-to-kill-the-penny-fmr-us-mint-director.html