A nationwide coin shortage caused by the coronavirus pandemic has revived a debate: Is now the time to eliminate the penny?
During lockdowns, consumers have stayed home and avoided emptying their piggy banks of coins in exchange for paper money. Shoppers have also opted to rely on credit and debit cards instead of touching cash.
With coins in short supply, the Federal Reserve formed a U.S. Coin Task Force, which will make recommendations on ways to cope with the shortage.
The shortage has led to renewed discussions about the fate of the penny, which has seen its purchasing power fall because of inflation while its production costs have risen.
Sunde White, a 46-year-old small-business owner in San Francisco, said the coin shortage was one more reason to retire the penny.
“I hate pennies,” said White, adding that they are so useless that she usually throws them on the ground when she gets them back as change. “They’re so stupid.”
Even before the coin shortage, she already priced her greeting cards and coloring books at 50 cents or $1 increments for sales at festival stands to save the inconvenience of having to use pennies, she said.
Given the economic crisis facing the United States, the government could use the money it would save by ending the production of pennies for more important causes, she said. The United States Mint manufactured more than 7 billion pennies in fiscal year 2019, at a loss of nearly $70 million.
Canada stopped making pennies in 2012, following other countries, including Britain and Australia, which already abandoned their smallest-denomination coins. Canada got rid of pennies for reasons that also apply in the United States: They are not very useful, with too many sitting in jars, and they cost more to make than they are worth.
Each penny costs about 2 cents to produce, according to a 2019 report by the mint. Pennies accounted for 59% of the 12 billion coins the mint manufactured last year.
But the movement to eliminate pennies faces significant opposition.
Some people support the penny for sentimental reasons. It was one of the first coins made by the mint after it was established in 1792.
Another reason, offered by Americans for Common Cents, an advocacy group that provides research for Congress on the value of the penny, is particularly pertinent during a pandemic: Older pennies are made mostly of copper, which is antimicrobial.
Penny proponents also argue that eliminating pennies would amount to a 1-cent sales tax for consumers because prices that end in 99 cents are common.
Robert Whaples, an economics professor at Wake Forest University, said his research, which examined data from a chain of convenience stores, showed that customers ended up breaking even over time because prices were rounded down as much as up, considering people buy multiple items and when accounting for tax.
“Right now, with the coin shortage, is a good opportunity to seize the issue,” he said, arguing that pennies should be eliminated from circulation.