We Need to Get Rid of the Useless Penny

We Need to Get Rid of the Useless Penny

Bias

Minimal Left Bias
This article has minimal left bias with a bias score of -22.2 from our political bias detecting A.I.


Your browser does not support the canvas element.

Winston Wang
Democrat
Managing Editor
Contributor on The Bipartisan Press

Hover to Expand



Remember when you asked where our taxpayer money is going? Well, in 2018, the U.S. Treasury minted seven billion new pennies.

It cost more than $105 million, at a production cost of 1.5 cents per penny.

Think about that for a second. That’s a -33 percent return, or $35 million lost, not including the cost of transportation or labor. In the grand scheme of things, 35 million isn’t much. But it adds up. A 35 million here, 5 billion there, and soon, a few tens or hundred billion have been wasted.

Talk about a bad investment.

Pennies cause more even more trouble than they are worth — quite literally. With the average hourly wage in the U.S. at more than $22 an hour, the average worker makes 6/10ths of a cent every second. If you take three seconds to stop and pick up a penny, you would be at a net loss, assuming you were on your work shift. Even if you aren’t working, you’re just adding to the extra time you spent handling (useless) pennies every year.


In fact, you would probably be better off if you threw away all your pennies and never saw one again. After all, the average American spends 2.4 hours a year handling pennies. That’s 2.4 hours you could have spent watching TV. Or sleeping. Or working.

Even if you don’t have a job and decide to pick up a penny. You’ll need to find 399 more before you can buy yourself McDonald’s. The fact that the penny was just sitting on the floor should signify how much our society values the penny.

The answer? It doesn’t. As Huffington Post contributor Nick Wing puts it, “It seems like the only reason to carry pennies now is to protect yourself against getting more of them.”

The penny is literally worthless. Vending machines no longer accept it. Its purchasing power is next to none, even if you group them together. Give a homeless man a penny, and he’s no better off. Most people don’t even bother keeping the pennies they get at cash registers — they just leave them for the next person. In fact, some Chipotle restaurants decided to stop using pennies altogether and just round down, even at a loss to themselves. In the end, pennies only provide a net loss for both the government and other people.

Did I mention the environment? Pennies aren’t actually made of copper anymore. Instead, zinc is used. However, the environmental cost of mining and molding zinc is far beyond the value of the penny that is produced.

Then why do we still have them?


Well, the most commonly argued point for the penny is that removing it would result in, “rounding tax,” where stores round prices to the nearest nickel and therefore consumers would have to pay extra. According to a 1990 study by economist Raymond Lombra, this would trigger mass-inflation because the extra costs would bring the Consumer Price Index (CPI) up, which is closely tied with inflation. The study looked at convenience store’s prices and simply assumed that each consumer would buy three items in one visit.

However, another study in 2006 based on actual consumer data, says that consumers would be better off getting rid of the penny. Besides the time factor, consumers would actually make more money than they lose.

Even if consumers do end up coming up negative, the amount would be far from enough to affect the economy enough cause widespread inflation.

Furthermore, all this assumes that people pay with cash. Not only is e-commerce growing, so is the use of a credit card, which have become more convenient and just as, if not more, widely accepted compared to cash. This means cash use has been steadily declining, making pennies even more obsolete.


The remaining reason to keep the penny would be solely for sentimental purposes. Quite simply put, Americans just want to keep the penny. Despite its impracticality, Americans don’t want to say goodbye to the penny and our beloved Abraham Lincoln. But remember, Lincoln is still on the five dollar bill. And in the end, is a cent really worth its tremendous cost?

Next time you see a penny? Don’t bother picking it up.

Content from The Bipartisan Press. All Rights Reserved.



Please note comments may not immediately appear as they pass through our spam queue.

COMMENTS (1)

  • comment-avatar

    Just to start off, I agree 100% that continuing to mint one cent coins is a waste, but some math issues:

    “…minted seven billion new pennies… cost more than $10.5 billion, at a production cost of 1.5 cents per penny.”

    1.5 cents x 7B is 10.5 billion cents, not 10.5 billion dollars; should be $105M.

    “or $3.5 million lost, not including the cost of transportation or labor”
    7 billion one cent coins are worth $70M… so with the corrected cost above, a loss of $35M, not $3.5M


    “The fact that the penny was just sitting on the floor should signify how much our society values the penny.” — well, lots of things can just be “sitting on the floor” but still have value.

    I have seen nickels, dimes and quarters on the floor. I have found one dollar bills on the ground as well as bills up to $20. I found a diamond tennis bracelet on the floor at a Catskills Hotel dining room. The owner didn’t find it to be worthless, they just dropped it (and offered me $50, in the 80’s, as a reward… that my parents insisted was not necessary).

    Sometimes things on the ground are there because the owner deemed it worthless and sometimes they stay there because passers-by agree, but those facts alone don’t necessarily make it worthless. My company deemed a pair of DEC Alpha Workstations to be worthless, I asked them if I could have them and ultimately flipped them for ~$1000 each.

    “Give a homeless man a penny, and he’s no better off.”
    Sure, if you look at just a single penny, that is right. Give them a single nickel, dime or quarter and they are similarly no better off. Give them $1 and that might buy them a couple of hours worth of nutrients (an apple or a couple of bananas or a small bag of chips). Still only ‘very slightly’ better off really.

    It is really unclear where the line would be, so I think it is better to stick with the value vs cost of the penny (and nickel for that matter).

    RE: the 1990 and 2006 studies, we can do better. Canada recently got rid of their 1-cent coin, how did that work out for the consumer? Pretty sure it grades out as neutral. Australia and New Zealand also got rid of small coins as well in the last couple of decades with the same results.