I read this post, Let’s Ban Pennies, today from Marilyn Armstrong in which she bemoaned being sent to a collection agency for underpaying her phone bill by a penny! Seriously, a single penny.
Her post reminded me of a post I wrote back in June of 2013, titled “My Two Cents Worth,” on my now defunct blog. Since Marilyn raised the topic of pennies, I thought I’d jump on her bandwagon and share this six year old post.
Did you ever hear the tale about Moishe and Hershel, two aging, Jewish clothing manufacturers in New York City’s garment district? They were complaining about how rotten business was. Hershel says to Moishe, “I lose fifty cents on every pair of pants I sell.”
“Oy vey, Hershel,” Moishe responds, saddened by this news from his old friend. “How do you stay in business?”
Hershel shrugs his shoulders and replies, “I make it up in volume.”
Of course, this was way back before virtually all of our clothing was manufactured in Asian sweatshops.
And that brings me to the topic of this post: pennies. Over the years I have accumulated lots of pennies. Whenever I make a cash purchase, which is becoming rather rare these days, and get a few pennies back as change, I put the pennies in my pocket. When I get home, I take the pennies from my pocket and drop them into a glass jar that once held instant coffee, peanut butter, mayonnaise, or dill pickle slices.
Once the pennies reach the top of one jar, I screw the lid on it, put it on a shelf next to a lot of other change jars, and start over with a new jar. Now I have a dozen or more glass jars around my house filled to the rim with pennies. What the hell am I supposed to do with all those friggin’ pennies?
Is it worth the time and effort to lug these heavy, penny-filled jars to the bank to exchange them for paper money? Not really. The bank doesn’t want them any more than I do. And to accept your penny collection, many banks require that you put them in paper coin wrappers that hold 50 pennies each. Yeah, like I don’t have better things to do with my time.
Or you can go to one of those ubiquitous Coinstar machines found in just about every large grocery store. These machines will gladly take your pennies, nickels, dimes, and quarters and turn them into coupons you can redeem for paper money. Of course, you have to pay for that alchemy to the tune of 10 pennies on every dollar.
A Penny For Your Thoughts
But the real question is what good are pennies? When was the last time you bought any one item for less than a nickel? Hell, how about less than a dollar
Think about the look you’d get from the cashier if you handed her 25 pennies instead of one quarter, or worse, 100 pennies instead of a dollar. Even retailers don’t want pennies. Most these days have a little tray near the register labeled “Leave a penny, take a penny.”
So I found it interesting when I came across an article that pointed out it costs our government approximately two cents to produce and distribute each penny and more than ten cents for each nickel.
Given that the U.S. Mint generated 5.8 trillion pennies and just over one billion nickels in 2012, the difference between the cost to produce and distribute these lowly coins and their face values resulted in a loss of $109 million dollars. Your tax dollars at work.
The good news, though, is that the U.S. Mint is making a mint on higher denomination coins, such as quarters and half-dollars, which more than offsets the deficit it experiences with pennies and nickels.
Is It Time to Kill the Penny?
Eliminating the penny would cause havoc in the retail sales world, where everything cost some dollar amount plus 99 cents. We are conditioned to think that if you pay $49.99 for some product, you’re getting a deal because it cost less than fifty dollars! Oops, don’t forget the sales tax.
When it comes to gasoline, which is always priced down to 9/10ths of penny, don’t you just ignore the 9/10ths of a penny when looking at the price? If the gas price is posted at $3.59 and 9/10ths per gallon, which is, for all intents and purposes, $3.60, our brains see $3.59. And we zoom into the gas station because it is selling gas for under $3.60 a gallon! Well, one-tenth of a penny under $3.60. Don’t spend your windfall all in one place.
Admit it. The penny is almost worthless and pretty much useless. Now we learn that it costs double what each is worth to produce them. So what is the rationale for continuing to mint pennies? It is time to put the penny down! Australia figured this out in 1991 and got rid of its pennies. The Royal Canadian Mint stopped distributing Canadian pennies to financial institutions this past February.
I say let’s follow the lead of Australia and Canada and kill the U.S. penny.
At least that’s my two cents worth, which, as Moishe and Hershel might have said, is worth bupkis.