Is It Time to Eliminate the Penny?

The U.S. Mint produced more than 7 billion pennies in 2019, each one costing 1.99 cents to make. Because so many pennies drop out of circulation, the government mints more pennies than nickels, dimes, and quarters combined. Pennies are made mostly of zinc, and zinc is expensive. The tab for producing all those pennies came to more than $145 million for 2019. Now with more shoppers staying home or wanting to avoid touching cash during the pandemic, there’s been a shortage of coins recently. And that has renewed debate over whether the U.S. should follow countries such as Canada, Australia, and New Zealand, which have done away with their one-cent coins. An economist and the head of a group funded by the zinc industry face off.

January 25, 2021

I recently spotted a penny on the sidewalk. Unlike most people, I picked it up, because I hate litter. And that’s exactly the problem with pennies: They’re worth so little that they’ve become litter. It’s not worth our time to use them.

It costs about 2 cents to mint a penny, so the government loses money by producing them. However, even if minting costs were zero, it would still be time to eliminate pennies, because our time is valuable and pennies waste time.

The median wage in the U.S. is about $19 per hour, so it takes only two seconds for a typical worker to earn one cent. But using a penny generally adds more than two seconds to the average retail transaction. Suppose that you’re waiting in line to make a purchase with three people ahead of you. The first one decides to pay in cash and either pokes around for a penny or receives one in change. Using the penny has wasted the time of five people (including the clerk). This scene is repeated many times each day. Each instance is pretty inconsequential, but with time valued at the median wage and pennies being used in about half of the roughly 60 billion annual cash transactions in the U.S., a delay of only two seconds adds up to a loss of about $600 million per year.

Pennies are so worthless that they’ve become litter and aren’t worth our time.

The United States Mint

Won’t customers end up paying more if we eliminate the penny and round cash register totals like $1.99 up to $2? When I analyzed nearly 200,000 convenience store transactions, I discovered that the number of times customers’ bills would be rounded upward is almost exactly equal to the frequency with which they’d be rounded downward. While individual items’ prices often end in nine, cash register totals don’t—because people buy multiple items and must pay taxes.

Finally, there’s a strong green argument for eliminating pennies. More than 6 billion pennies disappear each year, either lost or thrown away. That’s nearly 17,000 tons of metal that’s needlessly mined and smelted each year, harming the environment in the process. It’s time to let the penny go.

—ROBERT WHAPLES

Professor of Economics, Wake Forest University

More and more purchases are being made with credit and debit cards and other forms of cashless payment. At the same time, the cost of producing coins is increasing. So does it still make sense to keep the penny in circulation? The answer is a resounding yes.

First and foremost, a low-denomination coin helps keep prices in check. Without the penny, transactions would have to be rounded to the nearest nickel. But that would make goods and services more expensive, as profit-maximizing businesses would round most prices up, which would hurt consumers every time they shop.

Additionally, people in economically underserved and under-banked communities need the ability to make cash purchases. Many people with relatively low incomes (particularly the young, elderly, and members of minority groups) don’t have access to credit cards, use cash more frequently, and tend to make more small cash purchases, including using the penny.

It’s also wrong to suggest that halting production of the penny would save the government money. Without pennies, we’ll need to mint more nickels. How can the government save money when it costs almost a dime to make a nickel today?

Polls show that two-thirds of Americans want to keep the penny in circulation.

National Museum of American History

For those who don’t want their pennies, please donate them to the many charities that collect them to raise money for important causes like hunger and cancer research. The Salvation Army, the Ronald McDonald House, and the Leukemia & Lymphoma Society, for example, raise millions of dollars through penny drives. That’s not small change.

So can we do without the penny? Not if we want to keep inflation in check, protect America’s hardworking families, and continue helping charities raise millions of dollars. Polls show that two-thirds of Americans want to keep the penny in circulation. In fact, public support for the penny has remained consistently high for decades. It’s not just for sentimental reasons—people know keeping the penny makes good economic sense.

—MARK WELLER

Executive Director, Americans for Common Cents