Is It Time To Kill The Penny?
Is It Time To Kill The Penny?
Planet Money July 14, 20206:30 AM ET By Greg Rosalsky
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Banks and laundromats are scrambling. Arcades and gumball machine operators are bracing for the worst. Grocery stores are rounding their prices to even dollars or rejecting cash altogether. The specter of the coin shortage lurks everywhere.
Blame COVID-19. The U.S. Mint cut back on coin production this spring to keep its workers safe. Meanwhile, the economy is constipated. "With the closure of the economy, the flow of coins through the economy has ... kind of stopped," explained Federal Reserve Chair Jerome Powell last month. Coins sit idle in closed stores' cash registers and people's homes, and they're not making it to the banks and companies that need them for business.
The coin shortage could be a rallying cry for a long-running movement that has lost steam in recent years: Kill the penny! Last year, almost 60% of the coins that the U.S. Mint churned out were pennies. 60 percent. It made more than 7 billion pennies. Seven billion. That's a lot of manpower that could be used toward making coins we actually need.
The penny is basically worthless. Actually, it's worse than worthless. It costs the U.S. government about 2 cents to produce every penny. Pennies aren't even worth our time. Wake Forest University economist Robert Whaples has calculated that the typical American worker earns a penny every two seconds. It takes most of us more than two seconds to fumble around with change or pick a penny off the ground, which explains why there are so many pennies on the ground. Money is supposed to be the medium of exchange, not dead weight.
The congressman who tried to kill the penny
Jim Kolbe spent two decades trying to kill the penny. He's a former Republican congressman from Arizona, and he began his fight in the late 1980s. Initially, it was not a noble-minded quest to free us of the penny. He says, frankly, that he first wanted to help the copper industry in Arizona by getting rid of the paper dollar and replacing it with a copper-coin dollar. He saw polling that showed there was widespread support for killing the penny, so he and his colleagues bundled the idea of a new copper-coin dollar with the idea of killing the penny. (The penny is made mostly of zinc, not copper.)
But over time, Kolbe says, his proposal to kill the penny became more than just a way to help the copper industry. "It was a logical reform that would have saved the U.S. government a lot of money," he says.
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https://www.npr.org/sections/money/2020/07/14/890435359/is-it-time-to-kill-the-penny