No More Cents- A Fond Farewell to the Penny

Trump's order to cease penny production has caused shortages, rationing and confusion with retailers, but the truth is the penny is just not worth keeping around.

Back in February, as part of President Trump’s ongoing efforts to improve government efficiency, the U.S. Mint was ordered to cease production of the penny. The decision was based on numerous “economic and production factors, combined with evolving consumer behavior,” but mostly because of the fact that it costs 3.69 cents to make the one cent coin. Thus, on November 12, the U.S. Mint in Philadelphia held a small ceremony where the U.S. Treasurer Brandon Beach struck the last penny that would be released into circulation.

While the Mint is no long producing the penny, it is important to recognize that there are still somewhere between 114 to 300 billion pennies in circulation, which will remain as legal tender, so it is not as though they won’t be around for some extended period of time. In fact, it is the overabundance of them and their negligible worth that is the main reason why they are no longer being made. Why? Because according to one former Mint director, for the last thirty years, and at any given moment, as many as two-thirds of the total pennies in existence are not in actual circulation. Where are they then? The answer: in jars or cans in people’s homes, in your couches, under your car seats, or lying in store parking lots after people received them as change. For those who keep them, they are being saved up by people until it is determined that they have enough to make it worth their while to eventually cash them in (most likely at one of those Coinstar machines).

However, from the perspective of any business who handles cash, those pennies given to cash-paying customers as change are rarely returned to the business by other purchasers. Thus, they are forced to continually pay for cash handling services that arrive in armored trucks to deliver additional rolls of pennies to give out as change (which again to remind you, cost the government more to make than they are worth), most of which are quickly taken out of circulation. Given this reality, Trump’s decision to cease the production of the one cent coin makes sense. This is surely something that any normal American, most of whom are hoarding those pennies themselves, should be able to appreciate.

But What About the Poor People Who Use Them?

We are of course living in a highly polarized culture, so needless to say there are some people who are opposed to the demise of penny production. Some of them are simply opposed to any action taken by the president, or the ending of any government service no matter how wasteful it is. Others, while they see the need for eliminating the penny, are part of the oppression narrative commerce sector, and thus feel compelled to “stand” with whatever “marginalized” group that they feel will be negatively impacted by the decision. Among these critics, two major concerns have been raised.

The first is the argument that the elimination of the penny will disproportionately affect the poor. According to Mark Weller who is associated with the site pennies.org, the elimination of the penny will hurt “people with relatively low incomes (particularly the young, elderly and minorities), who use cash more frequently than high-income earners” as well as “unbanked Americans” who apparently do not have access to banks and thus are required to only use cash. It is important to note, however, that Weller serves as a lobbyist for a company called Artazn, which coincidentally has an exclusive contract with the U.S. Mint to provide the zinc discs from which pennies are stamped, so his concern for the poor should probably be given only a penny’s worth of consideration. Furthermore, his assertion that the poor will be hurt from the demise of the penny feels both condescending and nonsensical, since even “poor” people can use payment apps on a cellphone or loadable/pre-paid debit cards. This lobbyist’s definition of “poor” is clearly out of touch with the experiences that most Americans have with pennies. After all, try tipping your “poor” struggling food server with pennies or giving them to homeless persons who hold up “Anything helps” signs, and I surmise the only person who is at risk of being hurt will be you after the coins are immediately hurled back at you.

The other criticism over the ending of producing the penny is without new pennies being issued to replace the ones that people don’t recirculate, shortages and rationing of pennies is bound to occur. While it is true that banks and retailers are running short on pennies, the crux of this complaint is not about the shortages, but rather that Trump’s order to stop making pennies should have come with some official directives regarding how to handle the transition. In a recent article by the The Atlantic, the authors’ left-of-reason bonafides were on full display as she whined about the President offering no guidance on what to do with “all the pennies in take-a-penny-leave-a-penny trays, and cash registers, and couch cushions, and the coin purses of children, and Big Gulp cups full of pennies.”

This same concern was mirrored by the Retail Industry Leaders Association who worried that “the speed of the phase-out and the lack of formal guidance from the administration—and no action from Congress since the shutdown—have created significant challenges for retailers and all businesses that accept cash.” The worry is that without any “formal guidance” from the government, unscrupulous retailers would be tempted to cheat their customers by rounding up or down to the nearest five cents, and necessarily to their financial advantage.

This complaint appears to be yet another case of a so-called “expert” getting overwrought over something they have little experience with, and which most business owners and other scrupulous capitalist are perfectly capable of working out on their own without having to overthink the issue.

Making Change IRL

As I have previously mentioned, my day job is a manager at a retail location, and two weeks have now passed since we have had to deal with this issue absent any “guidance” from the governmental. First off, at the store I work at I observed that pennies were already being rationed and in short supply with only one $1 roll (which is retail shorthand for two 50 cents rolls) being provided to each register for each shift. Secondly, I noticed a sign on the time clock offering that if anyone had extra pennies, the store desired to exchange them from us. Thirdly, cashiers could accept up to twenty-five pennies from customers (more than that would take too long to count) in exchange for other coins. Fourth, and perhaps most importantly, was the “rounding” that cashiers were instructed to do. If the resulting cents amount ended in 1, 2, or 3, cashiers were to round down to the zero. On the other hand, if it was 6, 7, or 8, they were to round it down to the five cents. In all other cases they rounded up to five or to the next zero.

The cashiers were also permitted to ask the customers if they wanted their pennies when receiving change, with about eighty percent of them typically responding with a “no.” The result is that when you add up the pennies that people refused and compare it with the ones the cashiers did pay out, for the most part the store was probably breaking about even.

This is not complicated and it is not “unscrupulous.” Most people realize that the loss of 1-3 cents is not going to burden customers, and the potential extra “profit” received by the store is small enough to not offend moral sensibilities.

Do Not Fret: the Penny will Still be With Us

The penny is the longest lasting U.S. coin in circulation. Over its 232 year lifespan it has gone through various sizes and designs, beginning with the original Fugio cent in 1787. Later there were pennies with Lady Liberty cent (1816), the Flying Eagle cent (1857), the Lady Liberty in a Native American headdress (1859), and finally those displaying the profile of Abraham Lincoln in 1909 (on the hundredth anniversary of his birth), which were first circulated as Wheat pennies, and which included those that were coated with zinc during WW2 because copper was needed for the war effort. In 1959 the back side was changed to the Lincoln Memorial, and finally in 2010 with a shield that was used for the last version of the coin.

The penny has been part of our country since the founding, and in many ways has become part of our culture. But thanks to inflation and changes in the way people shop, it is now time for it to be phased out. Certainly, most people will be happy with shopping lines being slowed down less often by that one shopper who holds up the line by rummaging around for pennies to make exact change. Nor will people miss having to lug heavy cans, jars or sacks of pennies to the coin changing machine in exchange for a few dollars (which, personally speaking, depending on when and where you go, are magnets for panhandlers who will wait till you get your cash before they stop you and ask if you can spare any change).

The reality is that the transition to phase out the penny from everyday commerce could take many years, maybe even an entire generation. But with the billions of pennies that are still out there, in or out of circulation, it is not as though they are going to disappear any time soon, and Americans will continue to collect them. In fact, some of the last batch of pennies will be set aside for final proof sets that will contain a unique Ω (Omega) symbol, which will ultimately be sold at auction to the highest bidders. While the penny had a good run, its time has come. We therefore must say goodbye and good riddance (for the time being) to the one cent coin for our day-to-day purchasing; the penny is simply not worth it (both figuratively and actually).

In memoriam I offer a goodbye song to the tune of Green Day’s “Good Riddance (Time of Your Life)”:

“Another turning point, for the U.S. of A,
Inflation doomed the penny, the nickel’ll take its place
So just make new change, and don’t ask why
It’s not that hard to do, you’ll manage in time

This change was all predictable, and in the end it’s right
We’ll make do without the penny in our life.”

Photo Credit- Getty Images