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Does keeping the penny still make sense?
Newhouse News Service
WASHINGTON — They accumulate everywhere, multiplying faster than bunnies, it seems, in pockets, purses and dresser-top jars. And you can't buy much with them.
So why doesn't the United States get rid of the penny, especially now, when, for the first time, the copper-coated coins cost the government more than 1 cent each to make?
At least one bill has been introduced in Congress to retire the coin, but it never gained traction. And the bottom line may be that when it comes to the penny, Americans don't want change.
"Americans want to keep the penny, it's that simple," said Matthew Eggers, policy director of Americans for Common Cents, which is fighting to keep the coin in circulation.
The most recent survey — conducted last year by Coinstar, a Bellevue company that puts coin-counting machines in supermarkets and other locations — found 66 percent of Americans want to keep the penny. It also found 79 percent will stop to pick up a penny.
But the penny's detractors have been buoyed by new figures from the U.S. Mint that show the skyrocketing prices of the two metals used to make the penny — zinc and copper — have pushed the cost of making the coin across the 1-cent threshold for the first time, to 1.23 cents. The penny is 97.5 percent zinc and 2.5 percent copper, according to the mint.
Jeff Gore, who heads Citizens for Retiring the Penny, said the mint's figures add to a solid argument for abolition of the nation's oldest form of currency.
The penny is a waste of money and a waste of time, said Gore, who has a doctorate in physics and is doing postdoctoral work at the Massachusetts Institute of Technology.
Using data from Walgreens and the National Association of Convenience Stores that show handling pennies adds 2 to 2 ½ seconds to each transaction, Gore calculated pennies cost each American four hours a year. If each person's hour were worth $15, that's $15 billion lost nationwide annually, according to Gore's formula.
Eliminating the penny, he said, wouldn't cause a ripple because many merchants already round off prices through "give-a-penny, take-a-penny" dishes. Indeed, the United States got rid of the half-cent coin in 1857 without consequence.
Eggers, of Americans for Common Cents, countered that eliminating the penny would hurt consumers. Without it, transactions would be rounded off to the nearest nickel — and, he asked, which way do you think most retailers would round prices?
"What you'd see is consumers would be hit with a 'rounding-off tax' of hundreds of millions of dollars in the aggregate every year."
Also feeling the pinch would be charities that raise millions of dollars, one cent at a time, though "penny drive" fundraisers.
Then, there's history.
Some 300 billion pennies in 11 designs have been in circulation since 1787. The design for the first penny was suggested by Benjamin Franklin and some of the copper was supplied by Paul Revere.
Last year, the government minted nearly 8 billion pennies, each with Abraham Lincoln's bearded profile facing right. (His colleagues on other coins all looked left, until Thomas Jefferson did an about-face on the nickel last year.)
Eggers said the costs of zinc and copper have fluctuated greatly over the years and are at all-time highs. He expects the market price to level off, bringing the cost of making pennies below the 1-cent mark once again.
If the penny is retired, the nickel might be next. In acknowledging that pennies cost more than 1 cent to make, the mint also had bad news for nickel lovers:
A five-cent coin costs 5.73 cents to make.
Copyright © 2006 The Seattle Times Company