Offer Jeff Gore a penny for his thoughts and he won’t take it. The assistant physics professor at MIT and the founder of Citizens to Retire the Penny says the cent makes no sense. It’s time to pitch the penny.
“The penny served its purpose by helping cash transactions for many years, but it has not been helpful for a long time,” Gore says. “We spend $100 million a year to mint a coin that nobody wants. I hate getting pennies back.
“What drives me up the wall is when something comes to $1.02 and I don’t have any change,” he adds. “I pay with a $1 bill and start to slowly pull out another bill, hoping that they will just charge me $1. I hate exchanging a useful dollar for a big pile of change that just weighs down my pockets.”
Even though pennies are now nearly 98% zinc with just a trace of copper, they still cost 1.99 cents to produce. It’s been estimated that about $1.2 million worth of pennies a year are simply thrown away.
Getting rid of the penny would save the government $1.78 billion over 30 years, says Citizens Against Public Waste.
At least since 1990, Congress has introduced bills to eliminate the penny, with little traction. But earlier this year, President Obama said he supports the idea. “Anytime we’re spending money on something people don’t actually use, that’s an example of things we should probably change,” he said.
Gore insists that the biggest cost of the penny is not monetary but one of time.
“The National Association of Convenience Stores did a study showing that pennies extended transactions by two to two-and-a-half seconds,” he says. “You lose an hour or two per year dealing with pennies that you happily leave in jars or under the cushion of your sofa. Those couple of hours might not sound like much, but if your time is worth something, we’re talking about billions of dollars.”
While Gore’s anti-penny solution is rounding to the nearest nickel, he insists that rounding up or down, based on the total tab, will even out in the end. He also says that it will be difficult for a merchant to game the system. For instance, if one item sells for $1.26 and gets rounded up, two of them will sell for $2.52 and get rounded down. “So,” he says, “the rounding scheme is not exactly radical.”
Already this is how it works on Army and Air Force bases, where purchases at the stores are rounded to the nearest nickel.
A nickel, after all, is worth about what a penny was worth in 1972.
Still, the penny abides.
“Charities raise millions of dollars from penny drives,” says Mark Weller, executive director of the pro-penny group Americans for Common Cents. “A lot of neat lessons come out of that.”
As for the expense of making a penny, a nickel costs 10.09 cents to make. Weller figures that keeping pennies in circulation actually allows the United States to save money because fewer nickels need minting.
Plus, Weller believes rounding to the nearest nickel will inevitably result in higher prices. “It could impact working families. There will be no incentive for firms to price things in a manner that leads to rounding down. Pricing schemes can be designed to take advantages of cash purchases and those pennies add up for consumers.”
Besides all of that, certain charms of the penny will disappear if it goes the way of the half-cent (which remained in circulation until 1857). Everybody loves a bargain, and even the sucker bargain of, say, $5.99 instead of $6.00 maintains some allure. Plus, there is something rewarding about digging through pockets and extracting precisely the right amount of copper coins to pay an unwieldy price with exact change. It feels like a small — maybe even penny-sized — victory. And what will become of penny-savers, those small-town advertising circulars that get handed out for free? Nickel-saver simply does not have the same ring to it.
Watching the Gores and Wellers of the world indulging in their penny-ante battle certainly has a decent amount of entertainment value — more than the worth of a penny or a nickel — but their sparring and hypothesizing, as well as the battle for the $1 coin, may ultimately be moot.
According to AITE Group, an independent research and advisory firm focused on business, technology and regulatory issues, pay-by-phone transactions will total $22 billion by 2015.
Can the extinction of all physical money — pennies, dollars, even the brand new Benjamins — really be all that far off?
What can a penny buy?
1770s Colonists could buy a “penny knife,” a 5.5 inch folding utility knife, according to The Historical Shop in Louisiana. Of course, this wasn’t an American penny of today. Each state minted its own pennies, which were pegged to the English penny.
1792 The Coinage Act established the US Mint and printed the first American pennies and half-pennies. The first cents were about the size of a modern quarter and made of 100% copper.
1793 The first two pennies produced, called the “Flowing Hair Chain” and the “Flowing Hair Wreath” by collectors, were rejected by the public because they disliked the look of Lady Liberty on the front. The “Liberty Cap” replaced them and remained for three years. Liberty would undergo four more makeovers through the 1850s.
1830 The first “penny press” debuted in Boston. At the time, most newspapers cost 6 cents and were targeted toward the rich. Three years later, penny papers took off in New York, bringing newspapers to the masses. (Of course, at $1.50, the Sunday New York Post is still a bargain today!)
1857 The half-penny is discontinued as too penny ante, even though its buying power in today’s money is estimated at 10 cents. The penny shrinks to its modern-day size, adorned with a flying eagle (and later an Indian head) instead of Lady Liberty.
1870 Press reports at the time say that a penny could buy a loaf of bread.
1873 The first pre-stamped penny postcards were introduced. Today, it costs 33 cents to send a postcard.
1900 Street vendors sold “penny licks” of ice cream, still a rare treat. The ice cream was in a serving glass and sold by the taste. Of course, sanitation was a major problem.
1909 The modern, Lincoln-head penny is introduced.
1930 During the Depression, “penny candy” helped kids get through. Apples were a penny, as were many arcade games.
1972 A penny in this year is worth what a nickel does today.
Today Is there anything you can buy for a penny? No.