The Penny Problem

And now for something completely different!

Pennies.

Currently, America suffers under a debt that we owe to China that is something even Kratos can't shake a stick at - and he's Kratos, guys, from God of War - and this country is floundering awkwardly around insurance rates, inflation, a lack of money in X, Y, and Z, and trying to actually get anything done by what Congress is allowing the government to spend. Sounds gross.

It's not like getting rid of the one-cent piece will spontaneously create money, it actually seems the reverse to that, because, you know, removing a currency seems like removing money.

If economics was that simple...

I'll call this "The Penny Problem", because yeah.

I wrote an essay about this topic for English class at some point, and I still have it on my computer, so it's nice to have all the facts presently displayed in my face as I re-write it to be infinitely more appealing than some un-empathetic third-person thing that looks gross. But regrettably I discovered that some of my reference material is gone, and I needed that reference material!

In particular is a page from the U.S. Mint itself that actually states the production price of individual coins.

But anyways, I'll get to actually making my point.

     - In 2006, a penny cost 1.4 cents to make, and a nickel cost 6.4 cents to make.
     - In 2011, a penny cost 2.41 cents to make, and a nickel cost 11.18 cents to make. (Wing)

Ouch. I used the school database to get a Scholastic article-thing for that first point, but I, and thus, you, can't access that from home.

The Huffington Post page by Nick Wing is actually very useful towards a culmination of facts, if you want to read something you can trust better than a blog page.

Wing continues from the penny-and-nickel cost: "That means the government spent nearly $169 million in 2013 to put $70 million of currency into circulation."

Since 2000, 92 billion pennies have been minted, with 7 billion in 2013 alone, and some plain math means that those 7 billion pennies (70 million dollars) cost almost 14.5 billion cents (145 million dollars) to make, and this is only maybe including the cost of shipping those pennies around.

And honestly, what do most of us do with pennies? Put them into jars, toss them into fountains, loose them between couch cushions...they rarely get spent, and even then, we just tell cashiers to keep the change simply due to the hassle carting that many coins around can be.

The cost of pennies (and nickels) comes from what the coins are made out of: zinc and copper. While the penny is 97.5% zinc and 2.5% copper, which are both tiny amounts of metal alone, and are expensive. Copper is used in electrical wires, and while zinc itself isn't really used for anything, the simple fact that zinc is needed in pennies is making its price rise. Heck, the copper in pennies alone is worth enough that people melt the coins down in droves to sell copper for more than the coin itself costs!

Seriously, people do that, they really do. It's right here.

But just production prices aren't the only source of the waste-of-space that is a penny. Opportunity costs, the money spent/wasted doing something when work could be done instead, are a huge additional source of mysteriously missing funds.

According to an MIT scientist, Jeff Gore, an average American spends 2.4 hours a year searching for coins or waiting for people searching for coins. The original source for this I also found through a database, sadly, but I've seen it in more than one place otherwise, including Wing's article. The U.S. Bureau of Labor Statistics reports the average American wage as being 22.4$ an hour, and additionally, the US population is recorded as 320 million people with an unemployment rate of 6.7% at the end of 2013. With 298,560,000 working people (298.6 million) and the 22.4$ average wage, then roughly $6,688,000,000 dollars - 6.688 billion - is made an hour, and thus the wasted 2.4 hours a year handling coins wastes $16,050,000,000 dollars - 16.05 billion - a year from coin handling.

That's just math, folks. I honestly doubt my own skills in the subject, so call me out if it's wrong.

Now I know that you are statistically unlikely to pay for cash in everything, so you probably don't have this problem of waiting around for people or yourself to count money, but Jeff Gore is an MIT scientist, he very probably took that into account.

With similar math, an average American can make a penny in 1.8 seconds. If you or some other hapless fellow sees a glinting Abe Lincoln on the sidewalk, and you or they take longer than 1.8 seconds to pick him up, then money has officially been lost, because you could have worked 2 seconds longer and made more than what you just did by picking up a face from the sidewalk.

Which just makes my point really, since pennies end up on the sidewalk all the time.

I actually saw one on the floor in school once, and I skirted around it, while glaring, even though I wouldn't have lost anything, since I didn't have a job.

But yeah. You lost money by picking up money.

That sounds really messed up.

Most of the reason for the penny's continued existence is because of the historical significance and also because of an argument that getting rid of the penny rockets prices up a few cents to the closest highest nickel, where something that previously cost $2.02 cents now becomes $2.05 rather than $2.00, due to "corporate greed" or whatever. While yes this will happen in some places, guess what,  here's a secret: because of capitalism, prices will round down so that there are more sales. If a soda at McDonalds cost a $2.05 and right next door it's $2.00, than the cheaper one will sell more.

Even if opportunity costs mean that the cheaper one would cost more due to the time spent, but its unrealistic to assume other people will know that, and then acknowledge it.

For most of us who pay in credit, prices don't even HAVE to round, since digitally, there aren't production costs for pennies; they'll still exist in credit card payments.

But, wait, what about those people who do pay in cash? Typically poorer, they can't afford rounded prices, right?

A study in 2006 found that rounding actually gave consumers money, although not by much, it's not a loss for those people who can't deal with a loss. Furthermore, even without the study, on average, they'll just loose less money, only 19$ annually compared to the $50 due to opportunity costs from pennies. Even with a rounding tax to the nickel claimed, sales taxes are already rounded up, and no one seems to care, so that argument is a bust.

A second argument is that with less pennies, there will be more nickels, which, if you recall, cost 11 cents to make in 2011, and even more now, but the possible loss offset from this isn't even close to enough to overthrow the savings from abolishing pennies. Even a loss here is debatable, since 5 pennies cost 12 cents versus the 11 for a nickel. Penny drives wouldn't be, well, penny drives, but in this case, there will be a gradual reduction of pennies and not, like, a sudden disappearance of them, so donations will still be given.

You could also just donate actual sums of money too.

But...but Lincoln!

Yeah, uh, he's on the $5 bill, some dollar coins, and he has an entire statue of him in D.C., and I was there, it was pretty impressive.

Vending machines don't take pennies, tollways don't take pennies, we keep them so that we don't get change in the first place...out-of-U.S. military bases gave up pennies because shipping the coins over is not worth the price. Even a senator tries to get rid of the penny in the COIN Act in 2006, but failed, obviously, but a senator was trying to do something!

America has discontinued a coin before too, the half-penny in 1857, and at the time, it was nearly worth today's quarter, and yet we have dimes, nickels, and pennies still, and they are worth a fraction of that.

Stop fishing for coins, and fish for a solution.

--Shiizumi Valé/WillowEye10329