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U.S. Penny

Should the U.S. Penny Stay in Circulation?
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Although the U.S. penny was one of the first coins produced by the U.S. Mint after its founding in 1792, the coin has roots in ancient history. It was indirectly based on the Roman denarius, a  coin introduced in 211 bce that was worth a laborer’s daily wages; the coin’s name stemmed from the Latin term “deni,” meaning “containing ten.”  The coin ceased circulation during reign of Emperor Gordian III (238–244 ce). The French Carolingian King Pippin III (751-768 ce) revived the coin as the novus denarius, which was commonly called a “penny” or “denier.” In the late 8th century, the British translated the penny into a small silver Anglo-Saxon coin. As a former British colony, the United States adopted the penny when the country established its federal currency.[43][44]

Congress established a U.S. Mint in Philadelphia with the Coinage Act of 1792. The next year, on March 1, the mint produced the country’s first circulating coins: 11,178 copper cents, or the penny. [42]

According to the U.S. Mint, the new coins “caused a bit of a public outcry. They were larger than a modern quarter, a bulky size for small change. The image of Liberty on the obverse [heads side] showed her hair steaming behind her and her expression ‘in a fright.’ The reverse [tails side] featured a chain of 15 links, similar to the Fugio cent. However, some people felt that it symbolized slavery instead of unity of the states. The Mint quickly replaced the chain with a wreath, and a couple months later designed a new version of Liberty.” President Abraham Lincoln replaced Liberty on the obverse of the penny in 1909, making the 16th president the first chief executive to grace an American coin. [42]

In 1857 Congress, facing rising copper prices, made the penny smaller and stopped minting the half cent, the latter being unpopular with Americans. The discontinuation of the half cent makes the penny the only American coin to have been continuously minted and circulated since the creation of the U.S. Mint. [42]

The U.S. Mint shipped 4.1 billion pennies for circulation in 2023, down from 5.4 billion in 2022 and 8.4 billion in 2017. Pennies still account for a larger share of circulating coins than nickels (1.4 billion), dimes (2.7 billion), quarters (2.3 billion), and half dollars (18 million). [40][41]

A few members of the British Commonwealth—Australia, Canada, and New Zealand—have phased out their one-cent pieces, though the United Kingdom has retained their “one penny” coin.[2]

The U.S. Mint produces coins as instructed by the U.S. Congress, so a law would have to be passed by Congress and signed by the president in order for pennies to be removed from circulation. Several unsuccessful legislative efforts have sought to kill the penny. In 2017, for example, Senators John McCain (R-AZ) and Mike Enzi (R-WY) sponsored the Currency Optimization, Innovation, and National Savings Act, which ultimately failed but would have suspended minting of the penny for 10 years while the Government Accountability Office studied whether the change could be made permanent.[4][5]

So, should the U.S. penny stay in circulation?

PROSCONS
Pro 1: Preserving the penny keeps consumer prices down and avoids harming low-income households. Read More.Con 1: The penny has practically no value and should be taken out of circulation just as other coins have been in U.S. history. Read More.
Pro 2: A penny can be used for decades and is more cost-efficient to produce than a nickel. Read More.Con 2: The process of making pennies is costly both financially and environmentally. Read More.
Pro 3: Pennies raise money for charities. Read More.Con 3: Eliminating pennies would save time at the point of purchase without hurting customers, businesses, or charities. Read More.

Pro Arguments

 (Go to Con Arguments)

Pro 1: Preserving the penny keeps consumer prices down and avoids harming low-income households.

Mark Weller, executive director of the pro-penny group Americans for Common Cents, says, “The alternative to the penny is rounding to the nickel, and that’s something that will negatively impact working families every time they buy a gallon of gas or a gallon of milk.” [6]

The U.S. Federal Reserve found that minorities and low-income people are more likely to use cash than credit cards. Raymond Lombra, professor of economics at Pennsylvania State University, says the extra rounding charges would exceed $600 million annually and would “be regressive, affecting the poor and other disadvantaged people groups disproportionately.” [7][9]

One study found that penny rounding in Canada costs grocery store customers an estimated 3.27 million Canadian dollars (2.5 million USD) annually. [9]

Pro 2: A penny can be used for decades and is more cost-efficient to produce than a nickel.

Most U.S. coins have an expected circulation life of 20 to 30 years, meaning a single penny could be used thousands or even millions of times. So what if it costs more to make the coins than the coins’ face value? That’s a bargain for how many times it gets used. [1][10][11]

Without pennies, the Mint would be forced to make and ship more five-cent pieces. That would cost millions more annually than it would cost to keep making pennies. [1][12][13]

Pro 3: Pennies raise money for charities.

Organizations such as the Leukemia and Lymphoma Society, the Salvation Army, and the Ronald McDonald House ask people to donate pennies to raise funds. In 2009 the Leukemia and Lymphoma Society announced that school children had collected over 15 billion pennies in support of its charitable work—that’s $150 million dollars for blood cancer research and treatment.  [11][14]

Dagmar Serota, who created a nonprofit called Good Cents for Oakland, said, “Pennies are easy to ask for and they are easy to give. And it’s very easy for a child to say, ‘Will you help me support this nonprofit, will you give me your pennies?’” Elementary school students in Los Angeles gain significant leadership and civic engagement experience from the University of Southern California’s Penny Harvest program by choosing how to donate the money they raise. [6][15]

Common Cents, a nonprofit based in Dallas, has run a “Pennies from the Heart” program for 20 years, and the student-led efforts have raised over $850,000 for local charities. The Ms. Cheap Penny Drive for Second Harvest in Tennessee raised enough to pay for 316,039 meals for the hungry in 2017. [16][17]

Con Arguments

 (Go to Pro Arguments)

Con 1: The penny has practically no value and should be taken out of circulation just as other coins have been in U.S. history.

You can’t buy anything for a penny; vending machines and parking meters won’t accept them.  Harvard University economist Greg Mankiw stated, “The purpose of the monetary system is to facilitate exchange. The penny no longer serves that purpose. When people start leaving a monetary unit at the cash register for the next customer, the unit is too small to be useful.” Former U.S. Mint director Philip Diehl said, “[T]he value of a penny has shrunk to the point that, if you earn more than the minimum wage, you’re losing money stopping and picking up a penny on the sidewalk.” [18] [19] [20]

Comedian John Oliver noted, “Two percent of Americans admitted to regularly throwing pennies in the garbage, which means the U.S. Mint is spending millions to make garbage.” Two-thirds of the billions of pennies produced are never seen in circulation again once they reach a consumer via the bank. [21][22]

Con 2: The process of making pennies is costly both financially and environmentally.

In 2024, it cost three cents to mint one penny, which was the 19th consecutive year that it cost more to make the coin than the coin’s face value. Nickels cost a whopping 11.5 cents to produce. According to Fortune magazine, producing these two coins cost the U.S. Mint $179 million in 2023.[1][23]

Making pennies also has environmental consequences from mining and transportation. Mining zinc and copper produces carbon dioxide emissions and pollutants and uses vast amounts of energy.[24]

Over the last 35 years, 107 million pounds of carbon dioxide have been emitted due to pennies being delivered from the Mint to banks. A California company called Mike’s Bikes has banned the penny from its registers because “making pennies wastes natural resources [and] is toxic to people and the environment.” [25][26]

Con 3: Eliminating pennies would save time at the point of purchase without hurting customers, businesses, or charities.

The use of pennies in paying for goods and making change adds time to sales transactions. A study by Walgreens and the National Association of Convenience Stores found that pennies add 2 to 2.5 seconds to each cash transaction. [27]

As a result of that extra time per transaction, the average citizen wastes 730 seconds a year (12 minutes) paying with pennies.  Harvard University economist Greg Mankiw says that this wasted time costs the U.S. economy around $1 billion annually. An estimate from Citizens to Retire the U.S. Penny says that the 107 billion cash transactions in the United States annually add up to 120 million hours of time between customers and employees—at a cost of $2 billion to the U.S. economy. [27][28][29]

Rounding transactions to the nearest nickel instead of using pennies wouldn’t harm consumers or stores. Robert M. Whaples, professor of economics at Wake Forest University, crunched the numbers and found that “the convenience stores and the customers basically broke even.” [30]

Moreover, Canada eliminated the physical penny in 2013, while the cent value was maintained for non-cash transactions. Cash transactions were simply rounded to the nearest nickel. Canadian society adjusted well to the change. [46]

Charities, too, have well adjusted to our increasingly cashless daily lives. An executive with the Leukemia & Lymphoma Society told the New York Times that “soliciting donations in the form of ‘roundups’ (and add-ons) to credit-card transactions has proved ‘much more lucrative’ than coin gathering ever did.” Concluded the New York Times: “few things symbolize our national dysfunction more than the inability to stop minting this worthless currency.” [46]

Did you know?

  1. In 1792 Congress created a national mint authorized to make gold, silver, and copper coins, including the one-cent piece known as the penny. Abraham Lincoln’s face replaced an image of Lady Liberty on the penny in 1909, the 100th anniversary of his birth, making him the first real person featured on a regular-issue American coin. [31][32][33]
  2. The first penny, known as the “Fugio cent,” was reportedly designed by Benjamin Franklin in 1787. Franklin is also credited with the saying “A penny saved is a penny earned.”[35]
  3. The official name for the U.S. penny is “one-cent piece,” according to the U.S. Department of the Treasury, but early Americans were allegedly in the habit of using the British term “penny.” [4][35]
  4. Although originally made of pure copper, pennies today are composed of 97.5% zinc and 2.5% copper. [34]
  5. The U.S. Department of Defense banned the use of pennies at overseas military bases in 1980 because the coins were deemed too heavy and not cost effective to ship. 
  6. The difference between the face value of a coin and the actual cost to make it is known as “seigniorage”. [36][37]
  7. Men are nearly twice as likely as women to favor dropping the penny (39% vs. 20%). [3]

Discussion Questions

  1. Should the U.S. penny stay in circulation? Why or why not?
  2. Should the U.S. government consider removing other coins from circulation as transactions become more digital? Why or why not?
  3. How would removing pennies impact people who primarily rely on cash transactions? Explain your answer(s).

Take Action

  1. Analyze the pro argument of Mark Weller from Americans for Common Cents.
  2. Explore the penny at the U.S. Mint.
  3. Consider the con arguments from NPR’s Planet Money reporter Greg Rosalsky.
  4. Consider how you felt about the issue before reading this article. After reading the pros and cons on this topic, has your thinking changed? If so, how? List two to three ways. If your thoughts have not changed, list two to three ways your better understanding of the “other side of the issue” now helps you better argue your position.
  5. Push for the position and policies you support by writing U.S. senators and representatives.

Sources

  1. María Soledad Davila Calero, “The U.S. spent $179 million in 2023 minting pennies and nickels, and $100 bills are going out of style. Why do we still need cash?,” fortune.com, March 13, 2024; United States Mint, “United States Mint 2023 Annual Report,” usmint.gov, 2023.
  2. Brian Milligan, “The Penny Coin: Should We Follow Ireland and Phase It Out?,” bbc.com, May 8, 2016
  3. The Harris Poll, “Penny for Your Thoughts? Americans Oppose Abolishing the Penny,” theharrispoll.com, Sep. 22, 2015
  4. U.S. Department of the Treasury, “Resource Center: Denominations,” treasury.gov, June 15, 2018
  5. John McCain, “Senators John Mccain & Mike Enzi Reintroduce the Coins Act to Save Billions in Taxpayer Dollars,” mccain.senate.gov, Mar. 29, 2017
  6. Andrew Stelzer, “Phasing out Pennies in a Bid for Change,” npr.org, Nov. 29, 2009
  7. Shaun O’Brien, “Consumer Preferences and the Use of Cash: Evidence from the Diary of Consumer Payments Choice Working Paper,” frbsf.org, June 2014
  8. Raymond E. Lombra, “Eliminating the Penny from the U.S. Coinage System: An Economic Analysis,” Eastern Economic Journal, Fall 2001
  9. Vancouver School of Economics, “Penny Rounding Profitable for Canadian Grocers: UBC VSE Student Research,” economics.ubc.ca, Nov. 16, 2017
  10. Reuters, “Pennies: The Throwaway Coins We Can’t Let Go Of,” latimes.com, May 31, 1994
  11. Amy Livingston, “Should We Get Rid of the Penny? – 8 Reasons to Keep It vs Eliminate It,” moneycrashers.com (accessed July 2, 2018)
  12. Rodney J. Bosco and Kevin M. Davis, “Impact of Eliminating the Penny on the United States Mint’s Costs and Profit in Fiscal Year 2011,” pennies.org, Apr. 12, 2012
  13. United States Mint, “United States Mint 2015 Annual Report,” usmint.gov, June 2016
  14. Associated Press, “US Penny Campaign Benefits Blood Cancer Research,” newsday.com, Feb. 10, 2009
  15. University of Southern California, “The USC Penny Harvest Wrapped Up Its Third Successful Year,” communities.usc.edu (accessed July 2, 2018)
  16. Common Cents, “Non-Profits,” commoncentsdallas.org (accessed July 2, 2018)
  17. Mary Hance, “Penny Drive Sets Record in Raising Money for Second Harvest,” tennessean.com, Feb. 17, 2017
  18. Vlogbrothers, “I HATE PENNIES!!!! (Also Nickels.),” YouTube.com, Sep. 6, 2010
  19. Greg Mankiw, “Get Rid of the Penny!,” gregmankiw.blogspot.com, Apr. 22, 2006
  20. Philip N. Diehl, “The Real Diehl: It’s Time for the United States to Eliminate the One Cent Coin,” coinweek.com, Jan. 28, 2015
  21. Last Week Tonight, “Pennies: Last Week Tonight with John Oliver (HBO),” YouTube.com, Nov. 22, 2015
  22. J. William Gadsby, “Future of the Penny: Options for Congressional Consideration,” gao.gov, July 16, 1996
  23. Aaron Klein, “Time for Change: Modernizing to the Dollar Coin Saves Taxpayers Billions,” dollarcoinalliance.org, July 22, 2013
  24. Michelle Z. Donahue, “How Much Does It Really Cost (the Planet) to Make a Penny?,” smithsonianmag.com, May 18, 2016
  25. Josh Bloom, “Want to Help the Environment? Get Rid of Stupid Pennies,” acsh.org, June 17, 2016
  26. Mike’s Bikes, “Pennies Don’t Make ‘Cents,’ ” mikesbikes.com (accessed July 2, 2018)
  27. Retire the Penny, “It Makes ‘Cents,’ ” retirethepenny.org (accessed July 2, 2018)
  28. Sebastian Mallaby, “The Penny Stops Here,” washingtonpost.com, Sep. 25, 2006
  29. Greg Mankiw, “How to Make $1 Billion,” gregmankiw.blogspot.com, Sep. 25, 2006
  30. Consumer Affairs, “The Penny’s End Is Near,” consumeraffairs.com, July 2006
  31. Courtney Waite, “The Origination of the Lincoln Penny,” livinglincoln.web.unc.edu, Apr. 16, 2015
  32. United States Mint, “Fun Facts Related to the Penny,” usmint.gov (accessed July 2, 2018)
  33. APMEX, “The 1909-S VDB Lincoln Cent – the King of Lincoln Cents,” apmex.com (accessed July 2, 2018)
  34. United States Mint, “Historic Coin Production,” usmint.gov, Oct. 01, 2024
  35. Jennie Cohen, “10 Things You Didn’t Know about the Penny,” history.com, Mar. 30, 2012
  36. Army & Air Force Exchange Service, “Retail & General FAQs,” aafes.com (accessed July 2, 2018)
  37. David Kestenbaum, “What Is Seigniorage?,” npr.org, Jan. 9, 2009
  38. Business Wire, “Strong Support for the Penny in Recent Poll,” businesswire.com, Apr. 25, 2019
  39. Jenny Gross, “Will the Penny Survive Coronavirus? Some Hope Not,” nytimes.com, July 29, 2020
  40. United States Mint, “2023 Annual Report,” usmint.gov (accessed July 9, 2024)
  41. United States Mint, “2022 Annual Report,” usmint.gov (accessed July 9, 2024)
  42. United States Mint, “The History of U.S. Circulating Coins,” usmint.gov (accessed July 10, 2024)
  43. “Penny,” usmint.gov; Pat Heller, “The Lasting Legacy of the Roman Denarius,” numismaticnews.net, May 23, 2019
  44. Royal Mint Museum, “Penny,” royalmintmuseum.org.uk (accessed July 10, 2024)
  45. Janet Nguyen, “Does It Make Cents to Get Rid of the Penny?,” marketplace.org, June 30, 2023
  46. Caity Weaver, “America Must Free Itself from the Tyranny of the Penny,” nytimes.com, Oct. 7, 2024