Georgetown University’s Newspaper of Record since 1920

The Hoya

Georgetown University’s Newspaper of Record since 1920

The Hoya

Georgetown University’s Newspaper of Record since 1920

The Hoya

Penny No Longer Worth a Second Thought

A penny for our thoughts just isn’t worth it anymore, now that it costs the government more than $.01 to manufacture each U.S. penny, and American consumers should support the abolition of the penny for a variety of reasons.

Previous efforts to rid the United States of the penny, sponsored in Congress by Rep. Jim Kolbe (R-Ariz.), have not gotten off of the ground. But that was before the cost of zinc, the main metal used for the penny, rose high enough that it now costs the government 1.4 cents to mint each penny. Keeping the penny in production also increases overhead costs for the U.S. Mint; slightly more than 50 percent of coins struck in recent years have been pennies.

Kolbe’s proposed legislation calls for all cash transactions to be rounded to the nearest nickel. The idea of one cent, however, would not be taken out of our monetary system; credit card and other non-cash transactions would not be rounded. Prices could still be labeled as $19.99, and sales tax and all other additions or subtractions to a total amount would be taken into account before rounding occurred.

Grand totals ending in $.01, $.02, $.06 and $.07 would be rounded down to the nearest five cents, while those ending in $.03, $.04, $.08 and $.09 would be rounded up. This averages to a net rounding error of zero.

Arguments against getting rid of the penny are becoming less valid as the discussion continues. As the price of the penny continues to rise, keeping it becomes a less attractive option for. Also, it is increasingly not worth people’s time to handle the penny. The time required for people to handle pennies is a drain on the nation’s economy.

Rolls of 50 pennies cost stores around 60 cents each, and clerks must waste time counting up all their pennies at the end of the day. The National Association of Convenience Stores estimates that handling pennies is responsible for adding between two and 2.5 seconds to each transaction. Aggregating estimates for the resultant damage vary, but Citizens to Retire the Penny puts it at $15 billion each year. This may be an overestimate, but in my opinion, not by much.

Critics of removing the penny contend that its removal would increase prices through both rounding and inflation. Since we are not removing the hundredths column from our prices, this claim really has no merit. Prices ending in the common $.99 would indeed be rounded up, however, stores would most likely be inclined to change such prices to ones that end in $.95, which would save consumers the maximum four cents.

And, if consumers really wanted to, they could choose to end gasoline transactions in $.02 or $.07, causing them to be rounded down, while using credit cards for transactions ending in $.03 or $.08 to avoid the rounding up. It is difficult to find a scenario where consumers consistently lose out if the penny is eliminated.

Other arguments for keeping the penny are rather pointless. Americans for Common Cents, a pro-penny group, argues that “The penny is part of our nation’s history and culture,” and “Whose childhood would be complete without penny candy?” Who cares?

The half penny was retired in 1857 for the same reason some folks would like to retire the whole penny today – it no longer has sufficient value in our society. The smallest amount of money for which I’ve ever seen anything for sale is five cents for a cup of coffee off I-90 in rural South Dakota. I hear coffee’s a bit more expensive out here.

Believe it or not, the debate about whether or not to retire the penny is rather fierce behind the scenes. Arizona is a copper-producing state, and Kolbe’s constituents have been accused of benefiting from the legislation, because copper is the main ingredient in nickels. Americans for Common Cents, however, is actually an interest group supported by the zinc industry, which would certainly lose business if the penny disappeared.

These conflicting special interests will make it difficult to get rid of the penny without widespread support from America’s citizenry, but increasing awareness is the first step towards the goal. As increasingly more people “leave a penny” behind, our society will become more efficient.

Eric Rodawig is a senior in the College and can be reached at rodawigthehoya.com. THOUGHTCRIME appears every Friday.

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