I watched a rerun of a 60 Minutes episode last night on our nation’s economic state. I found the last segment, “Should We Make Cents?” really interesting. The interview was with the head of the US Mint, and the main question was, Should we keep making the penny?
Here’s a boiled down list of pros and cons for the beloved copper (really made from zinc) penny:
Against the Penny:
1) Each year the U.S. Mint creates 8 billion new pennies (12 pennies/second), totaling $80 million in legal US tender. But, the problem is, since it costs nearly two cents to make a penny, the actual cost to the US government for creating $80 million worth of pennies is $134 million. (Just for a side note, it costs nearly a dime to create a nickel!)
2) The one cent coin is “out of date” and because of it’s low worth, it has essentially no buying power. Additionally, not enough people actually use them; they simply go in a jar or piggy bank at the end of the day, perhaps to be rolled and cashed in on some later date.
For the Penny:
1) It showcases Abraham Lincoln, one of the most beloved US presidents. The penny is simply part of American culture: “A penny for your thoughts;” “A penny pincher,” etc. In other words, we simply have an emotional attachment to the little copper coin. Rebuttal to this point is as follows: just like the rotary phone and carbon paper, the penny is now simply out of date and no longer economical.
2) It’s argued that, if the penny is done away with, producers will round prices up to nearest nickel, therefore putting a strain on buyers – especially those people to whom the penny is actually important, that is the people of the lowest economic class who actually utilize the penny for their everyday spending. However, the counter-argument to this claim is: the calculation process to the final price is too complex to simply say prices would be rounded up to the nearest nickel. For example, retailers could actually round down on the sicker price ($1.95 instead of $1.99); plus, the existence of sales tax makes the final price too random to worry about which way (up OR down) the sticker price would be rounded; additionally, the fact that people often buy more than one item at a time randomizes the direction of rounding.
3) Charities make millions of dollars per year simply by having boxes in stores that ask people to donate as little as a penny (hoping that the customers’s loose change will go in the charity’s box instead of the coin jar at home). So, if the penny is discontinued, charities will lose a substantial amount of money. Rebuttal? Charities will simply ask for the new lowest denomination of coin: the nickel.
Here is the 60 Minutes segment if you want to watch it yourself.
So, what I’m wondering: what are YOUR thoughts on the issue? Is the penny a big enough part of our culture to keep it even if it’s costing the US government roughly $54 million annually in losses during this horrible economic climate? Would you miss it?