Banning The Penny Essay
Canada is dropping the use of its penny today. And some economists believe the United States should be following its neighbor's example.
The U.S. Mint spent 2 cents to produce and ship each of the 5.8 billion pennies sent to banks last year. But in addition to being a money loser for the Treasury, there are arguments that the penny has simply outlived its usefulness.
Greg Mankiw, Chairman of the President's Council of Economic Advisers under President Bush, said American consumers have shown they don't value the penny, even if most polls show opposition to getting rid of the coin.
"When people start leaving a monetary unit at the cash register for the next customer, the unit is too small to be useful," he said.
Related: The search for the cheaper penny
Businesses say rounding to the nearest nickel would save time for both their cashiers and their customers. But they're reluctant to push for a change that could spark a backlash. That's exactly what happened last summer when Mexican food chain Chipotle(CMG) started rounding at some of its high volume stores.
"Yes it would speed up transactions, and yes that is good," said Jeff Lenard, spokesman for the National Association of Convenience Stores. "But if it's a convenience that the customer doesn't want, we're not going to question the consumers' decision."
Advocates for keeping the penny include Americans for Common Cents, a trade group supported by Jarden(JAH), which has a subsidiary which makes the zinc and copper blanks turned into pennies by the Mint. The group commissioned a poll last year showing that two-thirds of Americans want to keep the penny. It often cites a study by Penn State economics professor Raymond Lombra that estimates that consumers would end up paying a "rounding tax" of $2 billion to $4 billion over the course of two years if the penny is eliminated.
Related: Kill the dollar bill for $1 coins instead?
But Robert Whaples, an economics professor at Wake Forest, has done his own study looking at thousands of convenience store purchases. That study shows consumers as a group would break even if stores rounded to the nearest nickel. He said so many pennies fall out of circulation each year because consumers don't see them as valuable, raising both the costs to the Mint as well as the economy as a whole.
"The main argument against the penny is that it wastes our time," he said. "We're clearly losing money on the penny."
Besides Canada's example, other countries have dropped their lowest denomination coins without problem.
But Whaples conceded that killing the penny is unlikely since the public isn't eager to give up the coin.
"The vast majority want to keep a penny, regardless of all the good arguments against it," he said. "It's a sentimental attachment."
CNNMoney (New York) First published February 4, 2013: 2:14 PM ET
We should get rid of the penny.
We should get rid of pennies because pennies are worthless, they only cost 1 cent. I think we should get rid of pennies because it cost more to make a penny than what it is worth, It cost 2 cents to make a penny and a penny is 1 cents. No more pennies because people throw pennies on the ground and that is bad for the environment because they are littering. Pennies are worthless. When a kid see a wishing well they would ask for money and their parents would give them a penny because they're not that important. Pennys are a waste to the world
No need to produce
Waste of money and fuel. To make 5 pennies is 2.40 dollars; to make a nickel it is 2.20. And the mint makes 20.27 million pennies a day. That concludes that it is a waste of time. Why waste your time on making pennies when you could be making dollars and other stuff more important than the penny?
It cost more to make.
It costs 1.7 cents to make a penny yet it is only worth 1 cent . This adds up to about 70 million a year in tax payer money to afford to make pennies for a year. Use common sense and get rid of the one cent piece and maybe we could start to draw back this debt we have built up.
It costs more to make than it is worth.
The penny should not exist any more because it costs (0.02) cents to make the penny. What's the point if its only 1 cent? Prices are going to be rounded to the nickel but its only 4 cents less. It doesn't really matter if the prices at the stores are rounded to the nickel. Pennies are good for people in need or children in need, but we can start doing that with nickels.
Some Filling Details
Firstly, I'd like to begin with costs.
The US penny costs roughly over 2 cents to make-that's double the amount the coin is worth.
If you were to couple that with the lack of pennies in circulation (thus causing more manufacturing), that can lead to a large worth of taxpayers' money being spent.
Money that can be used to pay other causes, like jobs, or restorations.
Secondly, I'd like to address some objecting arguments.
"Charities will suffer if the penny is removed!"
Now first of all, people donate their pennies not usually because they care-it's because they don't want it in their lives anymore.
When it comes to charity, you think of people who care for the cause donate.
If that were to be applied, then people would have no problem putting in a ten-dollar bill rather than a jar of pennies.
"If the coin were to be removed, prices will go up."
This annoys me in a large way, this just shows how people can't think things through sometimes.
Other than that, prices can also be rounded down.
Of course, there are some businesses that will round up-but who would buy from that? It's a dumb business move, especially if there's a rival business in hand.
"The penny is an American symbol."
This is a worthy argument to battle, as it really is an important symbol.
...If you think that way, of course.
This argument is going to be put forward as opinion-as-fact if I tread forward, so I'll stop here for this one.
"People will lose money if the penny is removed."
If the businesses were to be constantly rounding up, the average American will lose $18.25 annually against the other timeline keeping their pennies.
That's minuscule compared to the $100 million lost to the US treasury.
It costs too much.
The penny is not worth the money to make it. It costs US tax payers too much money to make it and therefore should be done away with. In addition more pennies are thrown away each year than are spent. The US government has a lot more things to waste money on than this archaic piece of useless money.
Lincoln still has the $5 bill.
I'm sure that if Lincoln were still alive today he'd fully support the removal of a coin that takes away from America's budget. It seems ridiculous that we're obsessed with the idea that Lincoln is a part of our history, only because we have the penny. We have plenty of records of Lincoln, he won't be forgotten.
Yes get rid of the penny
The penny has been used for over 100 years but due to inflation and the rise in prices the penny just doesn't have the same affect as it use to. 1 dollar doesn't go nearly as far as it did 50 years ago, and with the increase of purchases used with card transactions it is time to move on and retire the penny.
Pennies too old!
I know Abraham Lincoln is an important president but the 5 dollar bill has him. We waste 11 million dollars on pennies and most importantly no one uses them. The US mint agreed that we have about 90-200 dollars just in pennies lying around. The importance of currency is that people believe that it has value. Australia and Canada have done it, why not us? We can also get rid of the nickel. It's not too hard and the facts why we should keep the penny don't make sense. Sure in the 1800's it made sense to use them but now? No.
its a waste
It is a waste of money because we produced 50 million pennies and it costs 160 million dollars to make all of them. The u.S is already in debt so why should they spend their debt money on making pennies which cost 2.4 cents to make but are only worth 1 cent. And if people don't like the fact that the penny has abe lincolns face on and they would retire the penny the must have forgotten the fact that his face is also on the us five dollar bill and the 5 dollar bill is actually worth money and not just 1 cent.