Buzz
The ongoing discussion about the penny's role (specifically its existence rather than its monetary value, which is, naturally, 1/100th of a dollar) remains a prominent issue in contemporary U.S. politics. The first significant legislative attempt to address this was the Price Rounding Act of 1989, which sought to establish a method for removing one-cent coins from cash transactions. Though it failed, preserving Abraham Lincoln’s profile on the penny, the topic continues to surface time and again.
Producing pennies is, by all accounts, an inefficient use of resources and money for the U.S. government. In 2011, the U.S. spent $60.2 million making and circulating pennies, and by 2013, the U.S. Mint reported that it cost 1.8 cents to produce each penny (not factoring in distribution expenses). While there are still advocates for the coin's continuation, the evidence overwhelmingly points to the penny being unnecessary.
If the U.S. government were to discontinue the one-cent coin, what would happen to the existing pennies? For insights, it’s helpful to look at our neighbors to the north, Canada. Given the similarities between the coinage systems of the two nations, the results of such a phase-out would likely mirror those of Canada.
In 2012, Canada began the process of phasing out penny production as part of its Economic Action Plan. According to a New York Times article about the phase-out, Canadians were encouraged to either bring their pennies to banks for melting or donate them to charities, who would then submit them for melting. Retailers were instructed to begin rounding to the nearest five-cent mark starting on February 4, 2013. However, businesses still had the option to accept pennies for cash transactions indefinitely.
The U.S. produces an enormous number of pennies each year—the projected total for 2014 was 6,848,400,000—and if production were to halt today, the U.S. would have minted roughly 300 billion pennies since 1787. Of those, only 140 to 200 billion are actually in circulation. The low usage rate of the penny accounts for this, as many are tossed into fountains, lost between couch cushions, or dropped into subway grates. If the government were to phase out pennies, this trend would continue with the existing coins (that aren’t voluntarily melted down) until the remaining ones dwindle to the point where collectors take notice. How long will this take? Considering you can purchase a 5 lb. pile of Canadian pennies for just over five dollars U.S., it’s likely that it will take much longer than a year.
