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Abolish the Penny
Inflation has rendered the penny a wasteful currency denomination that can easily be eliminated.
The COVID-19 pandemic has affected our lives in unimaginable ways, including disrupting the supply of important goods, going back to the infamous toilet paper shortage at the pandemic’s outset. One problem in this vein that keeps plaguing us (pun intended) is coin shortages. This has led to many stores requiring exact change for cash transactions or forgoing them for cards altogether. But by far one coin is responsible for most of the problems: the penny. It’s time to get rid of it.
Such a move is not all that unprecedented. Our neighbors to the north, Canada, did it back in the early 2010s, stopping their production in 2012 and their distribution in 2013. Though the coin is still treated as legal tender, cash transactions in Canada are now rounded to the nearest multiple of five cents. Such a similar phase-out would be easy to implement here.
Though this comes at a cost of lost precision, it would still allow more precision than these currencies originally enabled. The constant march of inflation has rendered the penny more and more worthless. Many take delight at finding older “wheat pennies” still in circulation, but pennies are now only worth a tenth of what they were in their final year of production in 1956. We could make dimes the smallest coin and have a similar level of price precision as we did when these iconic copper coins were last created.
Since 1982, due to rising copper prices, their copper content was decreased, transitioned from mostly copper to being merely copper-plated. By weight, pennies went from 95% to just 2.5% copper, instead now being mostly zinc. However, despite this, these coins still prove somewhat costly to make. Since 2006, pennies have consistently cost more than a penny each to make, peaking above two cents each a few times. While these are still relatively inexpensive, we are at a point where the metals in the penny are worth more than the penny’s value as legal tender. Given how a penny continues to represent less and less money because of inflation, it is unlikely for pennies to ever cost less than their face value again.
The US Mint produces an enormous amount of pennies per year — over 8 billion in 2020 alone — but when you consider that cost in terms of the federal budget, it is admittedly small. That translates to millions spent in a yearly budget of trillions, which, though a lot in terms of a household budget, would not be enough to free up resources for the kind of widespread environmental and social spending that the United States needs to do to solve some of its most pressing challenges.
However, it is about so much more than the cost to the taxpayer. Pennies needlessly complicate every single transaction performed with cash. Keeping enough pennies on hand to make exact change is the main problem that the banking and retail shopping systems struggle to handle during the pandemic. So many pennies wind up gathering dust because they feel like more effort to count and spend than they are worth.
Producing the metal to make them has significant environmental impacts. The largest zinc reserves in the world are in the Red Dog Mine in northern Alaska, which has devastating environmental consequences for the surrounding area. Zinc is an important mineral that we cannot expect to cease mining, but is it worth it to produce billions of mostly useless coins of it per year? The fact each contains more than a penny of zinc shows it is not even truly capturing its market value worth. Though I see it as a progressive issue, perhaps even conservatives could see how penny production exists in practice as little more than government handouts for zinc mines..
There are certainly bigger problems facing the country, even ones caused predominantly by the pandemic. However, ditching the penny should not be a politically difficult move. We have already seen it work in the real world with Canada, and it will simplify so much of our in-person banking and shopping. The true value of such a change can never be properly quantified, even if it would save money and prevent the waste of important metals. We are so past the point where such a change made sense that it is time to do the obvious.