Does Keeping the Penny Still Make Sense?
By J. Scott Orr
Newhouse News Service
via Seattle Times
Sunday, June 4, 2006
http://seattletimes.nwsource.com/html/nationworld/2003038390_penny04.h [1]
tml
WASHINGTON -- They accumulate everywhere, multiplying faster than
bunnies, it seems, in pockets, purses and dresser-top jars. And you
can't buy much with them.
So why doesn't the United States get rid of the penny, especially
now, when, for the first time, the copper-coated coins cost the
government more than 1 cent each to make?
At least one bill has been introduced in Congress to retire the coin,
but it never gained traction. And the bottom line may be that when it
comes to the penny, Americans don't want change.
"Americans want to keep the penny, it's that simple," said Matthew
Eggers, policy director of Americans for Common Cents, which is
fighting to keep the coin in circulation.
The most recent survey -- conducted last year by Coinstar, a Bellevue
company that puts coin-counting machines in supermarkets and other
locations -- found 66 percent of Americans want to keep the penny. It
also found 79 percent will stop to pick up a penny.
But the penny's detractors have been buoyed by new figures from the
U.S. Mint that show the skyrocketing prices of the two metals used to
make the penny -- zinc and copper -- have pushed the cost of making
the coin across the 1-cent threshold for the first time, to 1.23
cents. The penny is 97.5 percent zinc and 2.5 percent copper,
according to the mint.
Jeff Gore, who heads Citizens for Retiring the Penny, said the mint's
figures add to a solid argument for abolition of the nation's oldest
form of currency.
The penny is a waste of money and a waste of time, said Gore, who has
a doctorate in physics and is doing postdoctoral work at the
Massachusetts Institute of Technology.
Using data from Walgreens and the National Association of Convenience
Stores that show handling pennies adds 2 to 2 seconds to each
transaction, Gore calculated pennies cost each American four hours a
year. If each person's hour were worth $15, that's $15 billion lost
nationwide annually, according to Gore's formula.
Eliminating the penny, he said, wouldn't cause a ripple because many
merchants already round off prices through "give-a-penny, take-a-
penny" dishes. Indeed, the United States got rid of the half-cent
coin in 1857 without consequence.
Rep. Jim Kolbe, R-Ariz., who sponsored legislation in 2001 to do away
with the penny, said he will introduce new anti-penny legislation in
light of the new cost figures.
Eggers, of Americans for Common Cents, countered that eliminating the
penny would hurt consumers. Without it, transactions would be rounded
off to the nearest nickel -- and, he asked, which way do you think
most retailers would round prices?
"What you'd see is consumers would be hit with a 'rounding-off tax'
of hundreds of millions of dollars in the aggregate every year."
Also feeling the pinch would be charities that raise millions of
dollars, one cent at a time, though "penny drive" fundraisers.
Then, there's history.
Some 300 billion pennies in 11 designs have been in circulation since
1787. The design for the first penny was suggested by Benjamin
Franklin and some of the copper was supplied by Paul Revere.
Last year, the government minted nearly 8 billion pennies, each with
Abraham Lincoln's bearded profile facing right. (His colleagues on
other coins all looked left, until Thomas Jefferson did an about-face
on the nickel last year.)
Eggers said the costs of zinc and copper have fluctuated greatly over
the years and are at all-time highs. He expects the market price to
level off, bringing the cost of making pennies below the 1-cent mark
once again.
If the penny is retired, the nickel might be next. In acknowledging
that pennies cost more than 1 cent to make, the mint also had bad
news for nickel lovers:
A five-cent coin costs 5.73 cents to make.
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