It costs $0.03+ to make a new penny. Think about that?
(MORNINGBREW)
NEWS ANALYSIS
Is the penny obsolete?
Max Zolotukhin/Getty Images
The penny is like an ashtray in an airplane bathroom—a holdover that no one has the energy to nix.
That’s the thesis of
Caity Weaver’s
7,000-word manifesto published in New York Times Magazine last weekend, in which she argues that the US needs to consign the measly tokens to the dustbin of numismatic history. She decided to offer her two cents on the matter after learning that producing a single penny costs the US Treasury
more than three pennies.
- The government lost over $94 million last year minting billions of the pesky discs, which are used mostly as change for cash purchases ending with .99 and…not much else.
- The vast majority are destined to vanish into couch crevices and other places of coin oblivion, abandoned by Americans who have no reason to carry currency with a face value that amounts to a rounding error after centuries of inflation.
Weaver is far from the first commentator to find the status quo absurd: She joins a chorus of penny abolitionists that includes prominent economists, US Mint officials, lawmakers, and at least
one POTUS (Obama). But despite years of grumbling about the superfluousness of the near-worthless coins and several congressional bills to ditch them, nothing has yet killed the penny once and for all.
Who’s grasping at pennies?
“A penny saved is a penny earned” rings true for the Tennessee metal manufacturer Artazn, the government’s sole supplier of the zinc blanks used to make the 1-cent coins (a penny is made up of 98% zinc coated with copper). The company, which was bought by private equity in 2019, has raked in $1 billion in revenue since 2008 from selling zinc discs to the US Mint.
Artazn’s lobbying on Capitol Hill is the main reason for the penny’s endurance, according to retired US Mint Spokesperson Tom Jurkowsky and other sources Weaver spoke to. Though the company spent a relatively paltry $3 million on coin lobbying efforts, Artazn is the loudest voice promoting pro-penny talking points, sponsoring the advocacy group Americans For Common Cents, which argues:
- The abolition of the penny would negatively impact low-income people and the unbanked, who make up a disproportionate amount of cash users, by causing stores to round up prices.
- Charities like the Leukemia & Lymphoma Society rely on penny donations for fundraising.
- Polls show that the majority of Americans want to keep the penny.
But many penny opponents claim that these arguments don’t add up to much, just like a bucket of pennies.
Down with the penny
Penny abolitionists point out that cash usage is declining and highlight studies showing that even cash-loving consumers would not be harmed if prices were rounded to the nearest nickel. Just like some after-tax totals would be rounded up by one or two cents, others would be rounded down (one study did predict a minuscule price increase in aggregate).
Plus, the US wouldn’t be the first country to ditch the penny:
- Canadian merchants say that consumers there have gotten used to the rounding system the country implemented when it stopped minting its one-cent coin in 2013.
- The US itself previously parted ways with the half-cent coin at a time when it was worth more than today’s penny.
Concerns for charities might also be misplaced. When Weaver reached out to the Leukemia & Lymphoma Society, she was told that the organization no longer relies on coin drives and has been more successfully using credit card payment roundups to fundraise.
As for the penny’s supposed popularity, the majority of Americans across party lines are on board with ceasing penny production once they’re told how much it costs to make them, according to a 2022 poll by progressive think tank Data for Progress.
There are some Abe Lincoln stans who worry that the demise of the penny would diminish the legacy of the 16th president, whose profile graces its obverse. Financial Times reporter Sam Learner proposes erecting a copper-plated Lincoln monument made out of melted pennies to appease them.
So, why are shiny new pennies still a thing? Weaver blames government inertia. The Fed reflexively orders them from the Treasury, the Treasury fulfills the order from the Mint, and Congress lacks the political urgency to officially nix them. But she claims there’s one person with the power to pull the penny kill switch: According to an obscure law Weaver discovered during her research, the Treasury Secretary can simply not order any coins she deems unnecessary.
—SK
