A penny saved is a penny earned, right? Wrong. As is turns out, it costs the US Mint two cents to produce a penny. A penny is made of zinc (97.5%), which has doubled in price, and plated with copper (2.5%), which has tripled in price since the penny came in to production. So what does that mean exactly? Glad you asked. The US Mint produced about 5.4 billion pennies in 2008 (versus 7.4 billion in 2007) at about 12 pennies per second. The value of 5.4 billion pennies is $54 million, but the cost to produce $54 million worth of pennies is about $108 million. So A=B=C does not even come close in this case. Not making logical sense to you? Don’t worry, you are not alone. Mark Weller of Ammericans for Common Cents (featured in a TIME article that you can read by clicking here) devotes his time to the cause of raising awareness of the money pit (the penny).
There are several countries, including my native country South Africa, that no longer use pennies. They simply round up or down to the nearest five cents. And while you feel like you are getting ripped off the first time your total is rounded up, you feel pretty darn good when it is rounded down. Need I mention how much lighter our pockets and purses would be without those darn pennies?
Think about this for a second: What can you buy with a penny? And I mean, just one penny. Nothing. Nothing is for sale that costs 1 cent. Plus, when going through a toll booth or buying a snack from a vending machine have you ever used a penny? Nope. Maybe they are on to something…
Pennies would be worth more if melted down to their metals and sold by the pound. This is defacing currency and is ILLEGAL, so don’t get any ideas. In fact, when the Indian Rupee value plummeted the country faced a national shortage of Rupees. Some clever little Indians figured out that they could melt the coins and make razor blades to sell for more than the coins themselves were worth.
So what is the debate really? In business as usual, if product production creates a capital loss, then that product is changed or production stopped. It seems the penny has more than just a face value; it has a sentimental value (sayings, piggy banks, etc.). If people really do not want to let go of their not so precious pennies, then why not change the metal from which they are forged? The term “shiny copper penny” could be changed, right?
Here is an interesting set of statistics that I heard on 60 Minutes:
On average, 2.5 seconds are lost in each transaction because of the penny (think about how many more pennies are given with change than other coins). That equals 2.4 hours of lost time a year per person. That comes to $41 a year per person. That amounts to a staggering $10 billion a year in lost time based on average wages.
Factor in the lost money in the production of pennies and you have a sinkhole.
What is the penny worth to you?
My darling,
My thoughts are, if a penny is worth two cents then they should mint it as a two cent. Everything can then be rounded up to the nearest 2 cent. That would cut down on the amount of pennies we carry around, save some metals and then the dumb people will not think that they are getting ripped off.
Going up or changing to five cents will be too much for many to bear and will blow their minds. For the bargain hunter, $5.00 still sounds like $5.00 but $4.98 still “looks” like a bargain and might save them and the US Mint some money in the long run. Well, that’s my 2 cents worth anyway!