Buzz
The question of the penny’s value (not its monetary value, which is obviously 1/100th of a dollar) is a recurrent topic in American politics. The first piece of legislation addressing this issue was the Price Rounding Act of 1989, which aimed "to provide a method for removing one-cent coins from cash transactions." The bill failed, and Abe Lincoln’s face remained on the coin, but the topic continues to be raised regularly.
By any standard, producing pennies is an inefficient use of resources and funds for the U.S. government. In 2011, the U.S. lost $60.2 million making and circulating the coin, and in 2013, the U.S. Mint estimated it cost 1.8 cents to produce each penny (excluding distribution costs). While there are arguments in favor of retaining the coin, evidence suggests that the penny’s existence is unnecessary.
If the government were to do away with the penny, where would all the coins go? To answer this, it’s useful to look to our rational neighbors to the north, Canada. Given the similarities between the coinage systems of the two countries, a phase-out would likely lead to comparable outcomes.
In 2012, Canada’s Economic Action Plan initiated the process of halting penny production. A New York Times article on the phase-out reported that Canadians were "encouraged to bring [pennies] to banks for eventual melting or to donate them to charities—which would likely send them in for melting." Retailers were instructed to begin rounding transactions to the nearest five-cent mark on February 4, 2013. However, the government allowed pennies to "continue to be used in cash transactions indefinitely with businesses that chose to accept them."
The U.S. produces a large number of pennies annually—the 2014 estimate alone was 6,848,400,000. If production were to stop today, the government would have minted about 300 billion pennies since 1787. Of those, only 140 to 200 billion are still in circulation. This is because pennies aren't used much—many end up in fountains, lost in couch cushions, or dropped down subway grates, among other places. If the government were to phase out the coin, the remaining pennies would continue to disappear this way (unless voluntarily melted down) until the quantity shrinks enough for collectors to take notice. How long will this take? Given that you can buy a 5 lb. pile of Canadian pennies for just over five bucks U.S., it's likely to be longer than a year.
