A Penny Saved Is Not Worth Much

Pennies are useless clutter, so why are they still around?

We’ve all been there. You buy something at the store, pay cash, and then stand there counting pennies to lessen the load on your wallet and foist them onto the store, all while the clerk watches impatiently and the people in line behind you fume.

What good are pennies? No one wants to carry them around and they pile up in your home. You fill containers because you can’t use them to buy anything in a vending machine or pay a toll, so there is nearly no benefit to carrying them around. Perhaps you pay electronically with a debit or credit card, so pennies don’t plague you, but try paying in cash, and you can’t escape them.

Even if you take away the annoyance factor, pennies are bad for the environment being made of 3% copper and 97% zinc, heavy metals that must be mined. Currently the largest zinc mine in the U.S., Red Dog Mine, has had problems with toxins entering the air as metal-laden dust, and metals leaching into the ground and water, prompting a lawsuit from communities downstream from its operations.

Metal mining becomes more expensive as the value of heavy metals goes up. As of 2010, it cost the government 1.79 cents to create each penny. The U.S. Mint created four billion pennies in 2010 at a $32 million loss. Lawmakers looked at all the items on the budget and cut funds for education and other much needed programs, but decided to keep churning out pennies at a financial loss.

The biggest argument against eliminating pennies is that rounding prices to the nearest nickel would cost consumers money, however, those paying electronically wouldn’t be affected, only consumers paying cash. A 2006 study showed that consumers actually gained about one cent for every 40 transactions, which essentially means that stores and consumers broke even.

Getting rid of the penny also cuts down on wasting time. Consumers and clerks spend at least a few seconds during each transaction that the customer digs for pennies or the clerk counts out change. Studies estimate that consumers spend more than 12 hours a year dealing with pennies, and that doesn’t include rolling them and taking them to the bank to trade them in.

One California business has taken matters into its own hands. Mike’s Bikes has banned pennies in its nine stores. The company is rounding each cash transaction down, in favor of the customer every time. Mike’s Bikes estimates that by eliminating pennies, it will save over $5,000 a year, and it wants to pass on some of those savings to their customers.

Why are we still stuck with this fiscally useless and environmentally damaging clutter? The penny debate has been raging since 2001, when U.S. Representative Jim Kolbe (R-AZ) introduced legislation to eliminate it. The legislation failed and despite numerous arguments to retire it, a decade later the (bad) penny still keeps turning up.

image: tattooed jj

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DISCUSSION

17 thoughts on “A Penny Saved Is Not Worth Much

  1. Pingback: Useless Metal: Why Do We Still Keep the Penny Around? « Anacristina79's Blog

  2. Pingback: Useless Metal: Why Do We Still Keep the Penny Around? - wehaveways's posterous

  3. Pingback: Why Do We Keep the Penny Around? | EcoSalon | Conscious Culture and Fashion » WinCom7 Blog

  4. Pingback: Useless Metal: Why Do We Still Keep the Penny Around? « Paola comenta

  5. Pingback: Useless Metal: Why Do We Still Keep the Penny Around? - ladyblu's posterous

  6. I believe that they mean reducing the prices for a rounded total.  So in this case, if the total was $10.95, the original price before tax would be $9.98.

  7. Copper Surfaces Kill Germs. Contact with pennies kills some of the germs on our finger tips.

  8. It takes 1.79¢ to make a penny, which means we should get rid of them.  The average American pays almost three times what their house is “worth” to pay off the mortgage and own it.  So, by your argument, we should get rid of all houses.

    The average coin is in circulation for about thirty years.  That means the cost of a penny made today is amortized to about 0.06¢ per year over it’s expected life.  Wow!  What a terrible cost/benefit ratio!

    The reason metal costs so much is because the dollar is so low.  Maybe rather than worrying about getting rid of pennies, as the author suggests, Congress should worry about American companies and jobs moving overseas and not paying American taxes.  Oh, wait, those same companies moving overseas are the ones paying — I mean “lobbying” — Congress to let them do it.

    So, If you want to get rid of your pennies, send them all to me.  I will gladly take them.

  9. We have pennies for two simple reason: taxes and the law.  Well, VAT if you live on the other side of the pond.  Here is an example: In California the state tax is 9.75%.  If I buy a $10 item the total I would actually pay is $10.98  Without pennies it would be really hard for me to pay that amount without pennies and even harder for the seller to give me the correct change back.  You want to round it down to the nearest nickel?  Fine, go ahead but here is the other part of the problem: the law.  The California state sales tax rate is 9.75%.  In the previous example we would round down the transaction amount to $10.95.  The State of California gets less money as the tax rate for this transaction gets lowered to 9.5%.  This lower amount violates the law and do you really think the State of California, or any other state that has a sales tax, would really take less money?  Good luck in properly documenting all of these little “rounding down” transactions for state sales tax entities and general accounting practices.

  10. Death to anyone suggesting that we wakl around with 5 kilos of change in our pockets like in europe. And you can’t just say “fuck it” and leave it at home, because there’s 12 euro in change. Oh yeah, it also makes transactiosn take lonegr, because now you dig through your fucking pocket for your 2 euro piece you no longer want to carry while I wait for you to pay me. No dollar or 2 dollar coins in the US!

  11. This is because Americans are by nature, conservative, and resistant to any change, no matter how sensible it is. This is also why there is no replacement for the ridiculous $1 bill. In Canada, there are not only $1 bills as coins (the Loonie) as well as $2 bills.

    I don’t see the US changing any of these things very soon. Even suggesting that they change the design of light bulbs to save energy has met with howls of protest from the Right, anxious to see government overreach even when it isn’t there.

  12. So when how long after the  penny is gone will the argument for getting rid of the nickle start?

  13. I agree with ya about the pennies… I’ve been saying the same thing for almost 20 years.  I do wish you’d make it easier to share your stories on Facebook without forcing us to allow you access to our accounts.  Would have loved to share this with my friends… hope you consider changing that.

  14. “Pennies are not useless! They are great for penny souvenirs, where the penny is pressed into a new design. They can be used for wishing wells or fountains and small donations. Rare or specially minted pennies can be collected. They can also be used for magic tricks or heads/tails games. Pennies are a history lesson, too. What do you have against Abe Lincoln, anyways?”I have nothing against Abe Lincoln, but after claiming pennies aren’t useless, you give three examples in which your pennies are literally thrown away or made financially insignificant. Seems pretty uselss then, huh? With our level of national debt, keeping the penny around at all is fiscally irresponsible–we’re wasting money producing something no one wants. Stop making pennies, save $32 million a year? Sounds reasonable to me.

  15. Pingback: Pennies are useless clutter, so why are they still around? - Saving Advice

  16. Simple solution: convert pennies to dollar coins.  They’re plentiful (gross understatement!), easily identifiable, already in circulation.  Would be a surprise stimulus for people who keep them in jars; would probably be big enough for an inflationary hit on the economy, though that could be adjusted away on paper by the fed.  Then, gradually (starting with the ones the mint has in warehouses), melt them down and turn them into a more substantial coin, like the pound, that you can feel in your pocket and gives you the sense that money is actually WORTH something.  I figure since Obama is from Illinois, he could do this as a tribute to Lincoln.

  17. Pennies are not useless! They are great for penny souvenirs, where the penny is pressed into a new design. They can be used for wishing wells or fountains and small donations. Rare or specially minted pennies can be collected. They can also be used for magic tricks or heads/tails games. Pennies are a history lesson, too. What do you have against Abe Lincoln, anyways?

 

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