Is it Time to Get Rid of the Penny?
So, you’re walking down the street and you see a small shiny object reflecting light from the sun above. It turns out the object is a penny. Do you pick it up? Is that 1 cent worth you bending over? What if the penny was on heads, would you pick it up then? In an informal poll we performed where we asked colleagues and members of the online community, we found that most people — around 9 out of 10 — would keep walking. For several of the people we asked, a quarter was the lowest denomination they would pick up, whether it was on head or tails.
The penny’s value has decline dramatically over the past 100 years. A penny in 1914 was worth about the same as a quarter is today, according to the BLS Inflation Calculator. In 1910, a dozen eggs were priced at around 36 cents and a pound of apples would only cost you about 11 pennies. Today, things are much different.
Falling out of pockets and into seat cushions, pennies can be found in the oddest of places. They end up in children’s piggy banks, on kitchen counter tops, in dresser drawers, and on car interior floors. Some may even call them a nuisance, instead of a thing of value, as it often takes over 100 pennies to purchase even the smallest items, like a cup of coffee or a candy bar. Is the penny obsolete?
Many people feel the penny should be eliminated. There are even entire websites — like RetireThePenny.org and Pennies.org– devoted to either keeping or getting rid of the penny. Those who want to retire the small copper coin pose valid arguments, as do those who feel the penny should be kept alive. Read on and check out some of the arguments from both sides.
Why get rid of the penny?
Those who are anti-penny feel that the small coin is a waste of time and resources. It costs the U.S. mint close to 2 cents (1.8 cents, as of late) to make a penny — a coin only worth 1 cent. In addition to the time and money it takes for the government to make pennies, pennies waste time for people who rummage through their wallets and pocketbooks searching for pennies in stores to find exact change. RetireThePenny.org estimates that Americans each spend around 2.5 hours each year handling pennies, or waiting in lines behind others who are handling pennies.
Some consumers even throw pennies away. Several members of online discussion boards (as far back as 2007) talk about how their pennies have no use to them, and they chuck pennies into the trash.
Why keep the penny?
If we got rid of the penny, all prices would need to be rounded so they could end in multiples of 5 or 10. Therefore, something that would have cost $4.77, would probably cost $4.80, and something that cost $1.99 would cost $2.00.
Sales taxes have to be considered, as well. Items priced at $1 currently cost $1.07 if there is a 7% sales tax. Would such items cost $1.10 without pennies? Would sales taxes increase? Advocates of the penny feel that prices would increase if we eliminated the small coin, and they may be right.
Those who are pro-penny also bring up how the penny is not the only coin that’s production cost exceeds its value. It costs almost 10 cents (9.4 cents, as of late) to make a nickel. If we discontinue pennies, would that mean the Mint would have to make more nickels at a higher cost?
Also, pennies sometimes end up in positive places, like charities and childrens’ savings. Eliminating pennies may reduce some of the money that goes to these places, even if it is only pennies. Let’s not forget to mention how important pennies have been in our culture and society over the past several generations. From wishing wells, to coin collections, to penny loafers, some people enjoy pennies and would hate to see them go.
What do you think?
The value of the penny will of course continue to decline, as inflation is inevitable. Are you for the penny or against it? If it were up to you, would you continue producing the pennies that some people find unnecessary, or would you retire them? Tell us what you think on our Personal Finance Cheat Sheet Facebook Page.