Since its introduction in 1793, the penny has become a beloved part of American culture. It gives us a chance to honor good ole Abe Lincoln, as well as something to squish into shapes when we visit amusement parks and rest stops.
It also is the inspiration for many of our everyday sayings, such as: “Find a penny, pick it up, all day long you’ll have good luck;” “A penny for your thoughts?” and of course “A penny saved is a penny earned.” If nothing else, the penny adds some color to the otherwise grey span of American coinage.
Although the penny has a lot going for it culturally, it has nothing going for it finacially.
In fact, it does more harm than good when it comes to economics.
Because the point of money is to make transactions more efficient, it is time to let the penny fall to the wayside.
It is time to realize that we can’t cling to symbols of our past, especially when it is harmful to us. It is time for the United States to abolish the penny.
First, let’s look at what the penny costs us:
According to the U.S. Mint, the penny is made up of 97.5 percent zinc and 2.5 percent copper and has been since 1982.
Due to the rising prices of these metals, the penny costs more and more to produce each year. It currently costs 2.4 cents to create one penny, which is only equal to one cent in value.
That is a loss of 140 percent for each penny produced, of which almost five billion were minted last year alone.
But, the cost of the penny goes beyond this initial price. The penny is also detrimental to opportunity cost, a term economists use to refer to the amount of money you could have been making had you been doing something else.
According to an article by the Washington Post, pennies, on average, add about two to two and a half seconds to each cash transaction.
This time affects not only the person paying, but the cashier and the people waiting in line.
This all boils down to a loss of about $3.65 per American per year. Multiply this by 300 million Americans and you get a loss of over a billion dollars to the U.S. economy each year.
Not only does the penny cost us, it also fails at its job of easing transactions—the purpose of money.
Pennies add time to transactions and it is also difficult to actually spend them. According to the U.S. mint, a penny weighs about 2.5 grams, meaning a dollar in pennies weighs about half a pound.
Try going to Hannaford supermarket and spending only pennies on the solo cups and ping pong balls—I mean the carrots and dip—you went there to pick up.
Beyond that, can you name a machine that accepts pennies? Not parking meters or vending machines—or worse yet—laundry machines.
Why is this? Pennies are not worth the cost that it takes to transport and store them.
You may ask: Won’t getting rid of the penny cause prices to go up and charity donations to go down?
After all, the Salvation Army depends on loose change and businesses will do what ever they can to get as much money out of each customer as possible.
The answer to those questions is no.
New Zealand and Australia both abolished their one-cent coins in the last decade due to their decreasing value, and neither country saw a rise in prices or a fall in donations. T
This is because stores were as likely to round up to the nearest $.05 as they were to round down.
Here is an example: One of the reasons prices are often $4.99 or $29.99 is because it causes the buyer to think they are getting something at four or 29 dollars, not at five or 30. Stores may round down to $4.95 and $29.95 to continue this effect.
New Zealand and Australia are not the only countries to follow this trend.
Last week, Canada adopted a measure to phase out their one-cent coin starting in the fall of this year.
The United States could benefit highly in joining this progressive trend.
It wouldn’t be the first time the United States Mint stopped producing a coin because the value was too low. In 1872, we said good-bye to the half-cent.
The change was due to the fact that the government determined it had too little value and was useless to
Americans in their everyday lives.
It is also important to note that when this was determined, the half-cent had as much buying power as a dime does today.
What’s the penny’s worth to us? It has cultural value, but is that enough? I don’t believe so.
While cultural heritage is important, honoring the past should stop when it starts to harm the future.
The penny is doing that now. Prices of metals will continue to rise, and even if they start producing the penny in a cheaper material— what is the point?
The penny is useless in everyday life. We more often bemoan pennies while we scramble to make change at the counter than we honor them.
For most Americans, pennies are nothing more than food for their piggy banks.
I think we need to look beyond the logical fallacy of “We have always had it therefore it must be good.”
I believe it is time to stop wasting money on a piece of metal that is more likely to end up in a jar than in a store register. It is time that we realize that a penny saved is less then a penny earned.
It is time to say good-bye to the penny.
I’m sure Abraham Lincoln will forgive us— after all, he is still on the five-dollar bill.