Reconsidering the Penny: An Economic Evaluation

What would our economic system be like without the penny? Would prices be rounded up for better profits, or rounded down for competitive marketing? And, more importantly, why should we care? After evaluating the major points of both sides of the argument, I’ve come to the conclusion that pennies should be redesigned so that they are worth equal to or less than they cost to make, rather than its production coming to a total halt.
From what I have discovered so far, there are three big proponents to keeping and redesigning the penny, the first of which having to do with the cost. Believe it or not, according to Jeff Sommer’s article “Penny Wise or 2.4 Cents Foolish,” “In the United States, the mint says, each zinc and copper coin (in other words, each penny) costs 2.41 cents to produce and distribute.” That means that it costs almost 2.5x the original value of the penny to actually produce one, and the Mint makes billion of pennies per year. Sommer also mentioned that “The [US] government -- that is, taxpayers -- lost $60,200,000 on the production and distribution of pennies in the 2011 fiscal year…” Although the penny’s cost efficiency has been improved

on in the past, it has never cost the same or less than one cent to produce and distr. each penny. This is a serious problem and it NEEDS to be addressed.
Moving on, there’s another subject I’d like to talk about; nickels. No, you didn’t read that wrong; nickels are another big financial problem that Congress should address. Sommer mentioned in the same article as mentioned above, “Each nickel costs 11.18 cents to produce and distribute, the mint says, at a loss to taxpayers of $56,500,000 in the last fiscal year.” According to him, the Obama administration asked for the authority to alter the composition of the nickel, too, in its 2013 budget proposal*. Therefore, nickels ought to be compositionally changed, as well.
As for the final point, it will be rather brief, but not any less important; pennies as easy donations towards a better cause.

All this means is that because pennies are worth so little, when a penny drive is organized within a large group of people, with everyone pitching in, the money raised will add up fast. According to Ted Waterhouse’s article “Give a Penny -- Save the Day!” he observed a good example of this principle in action; “Last week, Washington Middle School (WMS) hosted its annual Penny Drive for Charity. Students from every grade brought in bags and jars for pennies, and, with everyone’s assistance, they raised over $3,000 in one week!” The main point that the article has clearly made is “because they are worth so little, people don’t mind donating them to charity,” and I couldn’t have said it

better.
Jeff Sommer makes an interesting argument in his article, saying, “[If the penny was phased out, a] $2.01 cup of coffee should be rounded down to $2, while $2.03 should be rounded to $2.05, for example, but retailers in the real world might raise prices more than lower them. That could cause a small, one-time inflation burst…” This, in my opinion, is a very good point against the phasing-out of the penny, and to be honest, we have no idea just how much that inflation will affect the national market, but it will likely be of reasonable size. You see, this only counts as a counter-argument because during my research, my thesis would have been “the penny’s production would be better off stopped,” which is taking a very con-based stance, but I edited it when, in my thought process, I came across the concept of this inflation. Because of its unknown effects on the economy, I decided to create a different standpoint; simply to make the penny and nickel more cost-efficient.
With all things considered, the penny and nickel should become more cost-and-shipping-efficient, due to the cost of production and distribution being much higher than the coins’ values, and the easy method to raise money where everybody wins, which is virtually impossible except through the donation of pennies.