Why Do We Still Bother with the Penny?

They say, “a penny for your thoughts,” but most of us can’t be bothered to even think for that low of a price. The same goes for bending over to pick one up from the ground: Even a former director of the U.S. Mint advises not to waste your time as “you’re getting paid less than minimum wage for your trouble.”

It makes little economic sense to mint pennies. In recent years, the cost to mint a single penny, which are made almost entirely with zinc, has varied from its current 1.4 cents to 2.4 cents five years ago; the collapse in global commodities prices is largely behind its recent decrease in price.

It also costs far more to make a nickel than its actual worth, but unlike pennies, nickels stay in circulation for years. Most of us find pennies annoying, so they sit in a jar somewhere, out of circulation. Try getting rid of them, like I do when I buy a few things at the supermarket across the corner and watch the dirty looks pile on, as if I were holding up the checkout line by writing an old-fashioned check. Nevertheless, retailers need them to make change, which in turn leads banks to request more pennies, so the U.S. Mint keeps churning them out — at a cost of $144 million in 2014, as reported by the Wall Street Journal.

So, despite the fact that more transactions are processed electronically — 75 percent, reports CNBC — pennies are still accumulating in our mason jars, old ashtrays and between sofa cushions. Much of this is because of the phantom organization Americans for Common Cents (ACC), which makes the claim that pennies have the support of the majority of Americans — as in, yes, the same ones who hoard them because they don’t know what to do with them.

Claiming that pennies are critical to everything from memorizing Abraham Lincoln to raising funds for leukemia patients, ACC insists that 68 percent of us want the penny, according to a poll conducted, rather conveniently, by the ACC. The organization's mailing address alone is telling: K Street in Washington, D.C., ground zero for American lobbying organizations.

The Center for Public Integrity has been on the ACC’s case, and is calling the organization and its public-relations shills out. The ACC's executive director, Mark Weller, has long represented Jardin Zinc Products, a company that has provided many coin blanks to the U.S. Mint. Among his many shrill statements about this one-cent piece, Weller has testified that “working families benefit from the penny.”

Opponents are quick to point out that the elimination of the penny will spur merchants to raise prices by rounding up. But that is an absurd argument considering that, again, most transactions are done electronically. While President Barack Obama has mused publicly that something needs to be done for the penny, as it is a metaphor for how government can be dysfunctional, plenty of organizations have responded that keeping the penny is in the best financial interests of Weller and his client.

Most likely the penny will stick around for a while. Treasury Secretary Jacob Lew has mused about eliminating the one-cent piece, but now the Treasury is far more occupied redesigning paper currency that will cheer some but still leave many citizens unsatisfied. And as the Huffington Post points out, the penny is not a money-loser for the U.S. Mint itself, as coins minted for special collections more than offset the losses from making pennies (which is like a business saying, 'We’re losing money making land line phones, but, hey we’re making bank on smartphones').

So, the fact that pennies go largely unused should be enough of an excuse to stop minting them, but look for well-connected interests to get their way. After all, any suggestion that the U.S. shift to dollar coins and phase out the $1 note, which is commonplace in most industrialized countries, has also come with a “sky will fall” response.

Image credit: Reza/Flickr