The penny is virtually pointless. Many have tried to abolish the penny. Should we?

Question

The penny is virtually pointless. Many have tried to abolish the penny. Should we?

Answer 1

the penny has been the lowest currency for over a 100 years, by rights we should be going to the dime next for "spending power"

I hear people say but we price down to the cent.

yea we could price like this too $4.3683

but we dont we round to the .01

all we have to do is reprogram the cash tills to round to .05

reprice to the nearest nickel (no more 3.99)

and there we go

right now when sales tax is calculated it is automatically rounded up or down depending on which side of half a cent it lands on

same thing again when we get rid of the penny, everything automatically rounds to the nearest nickel

but good luck getting the old people who have had pennys thier whole life agree with you

they will bring up baloney like its part of our heritage/culture/history .... blah blah blah

but no real reason to keep the penny

so there you have it

Answer 2

In 2002, United States Representative Jim Kolbe (R-AZ) introduced the Legal Tender Modernization Act, and in 2006 he introduced the Currency Overhaul for an Industrious Nation (COIN) Act.[Christian Zappone (2006-07-18). "Kill-the-penny bill introduced", CNN Money. Retrieved on 2007-03-21] Both bills failed to advance in either house, and died when Congress adjourned.["Nickel for your thoughts? US bill seeks penny's end", Reuters (2006-07-20). Retrieved on 2006-07-20]

Arguments for elimination

Production at a loss — As of March 2008, it costs almost 1.7 cents to mint a penny.[Penny Problem: Not Worth Metal It's Made Of - March 16, 2008] Now that the price of the raw materials exceeds the face value, there is a risk that coins will be illegally melted down for raw materials.["Sharp practice of melting coins". BBC (2007-06-26)][ "United States Mint Moves to Limit Exportation & Melting of Coins" (2006-12-14)]

Distribution costs — The Federal Reserve incurs the costs of distributing pennies, which cuts into the vast seigniorage profits it makes from creating larger denominations of currency.

Lost productivity and opportunity cost of use — With the average wage in the U.S. being about $17 per hour in 2006, it takes about two seconds to earn one cent. Thus, it is not worthwhile for most people to deal with a penny. If it takes only two seconds extra for each transaction that uses a penny, the cost of time wasted in the U.S. per person is about $3.65 annually,[ Mallaby, Sebastian (2006-09-25). "The Penny Stops Here", The Washington Post, p. A21. Retrieved on 2007-08-09. "The median worker earns just over $36,000 a year, or about 0.5 cents per second, so futzing with pennies costs him $3.65 annually." ] about $1 billion for all America.[Mankiw, Greg (2006-09-25). "How to Make $1 Billion". Greg Mankiw's Blog. Retrieved on 2007-08-09. “Multiply that last figure by the number of Americans, and you find that getting rid of the penny would free up economic resources valued at about $1 billion a year.” ] Using a different calculation economist Robert Whaples estimates a $300 million annual loss.["The Penny's End Is Near". Consumer Affairs (2006-07-19). Retrieved on 2007-08-09. “Whaples said that based on the average American wage, $17 an hour, every two seconds of an average American's day is worth one cent. "That's going to add up to about $300 million per year for the U.S. economy," Whaples said.” ]

Limited utility — Pennies are not accepted by all vending machines or toll machines, and pennies are generally not accepted in bulk. In addition, people often do not use pennies to pay at all; they may simply use larger denominations and get pennies in return.

No higher prices — Research by Robert Whaples, an economics professor at Wake Forest University, using data on nearly 200,000 transactions from a multi-state convenience store chain shows that rounding would have virtually no impact. Consumers would gain a tiny amount -- about one-fortieth of a cent per transaction.["Topic Two: It's time to pitch the penny", The News & Observer (2006-05-14). Retrieved on 2007-03-21]

Historical precedents — There has never been a coin in circulation in the US worth as little as the penny is worth today. Due to inflation, as of 2007, a nickel is worth approximately what a penny was worth in 1972.[http://data.bls.gov/cgi-bin/cpicalc.pl CPI Inflation Calculator ] When the United States discontinued the half-cent coin in 1857, it had a 2008-equivalent buying power of 13¢.[http://www.westegg.com/inflation/ The Inflation Calculator ] After 1857, the new smallest coin was the cent, which had a 2008-equivalent buying power of 26¢. The nickel fell below that value in 1974; the dime fell below that value in 1980;[http://data.bls.gov/cgi-bin/cpicalc.pl CPI Inflation Calculator ] the quarter fell below that value in 2007.[http://www.westegg.com/inflation/ The Inflation Calculator ]

Hazards — The reduced-cost clad zinc penny, which has been produced since mid-1982, holds additional dangers when swallowed by children and others, unlike all previous U.S. coins. If the copper plating is breached, the penny quickly corrodes into a sharp-edged object, which is more likely to lodge in the digestive tract. Injury is more likely, and zinc and copper digested from the lodged pennies may be toxic. A dog was fatally poisoned by two swallowed pennies, although this was likely due to dogs' higher sensitivity to zinc toxicity and lower body weight.[Gastric Retention of Zinc-based Pennies: Radiographic Appearance and Hazards - O'Hara et al. 213 (1): 113 - Radiology]

Answer 3

Yes.  Back when the penny was first established, it could buy about what a quarter can buy today.  I'm not necessarily advocating getting rid of the dime, but the penny and nickel can go, in my opinion.

On the other hand, as far as electronic transactions, I'd have no problem with them still having a granularity of $0.01.

Answer 4

Times is tight. The penny has helped me buy that beer or pack of cigarettes I needed many times. Long live the penny!

Answer 5

Yeah we need it because some places make you pay the exact change.