The Penny's Demise: An Exclusive Look At The US Plan To Eliminate Penny Circulation

Kenji Nakamura

4 min read

Post on May 23, 2025

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The Economic Case for Eliminating the Penny

The core argument for removing the penny centers on its economic inefficiency. The cost of producing and circulating this tiny coin far outweighs its actual value.

The Cost of Production Exceeds its Value

• Minting costs: The US Mint spends significantly more than one cent to produce each penny. Estimates place the cost at over two cents per coin, creating a substantial loss for taxpayers.
• Transportation and handling: The sheer volume of pennies requires extensive resources for transportation, storage, and handling by banks and businesses, further increasing the overall cost.
• Economic inefficiency: Producing a coin worth less than its production cost is inherently inefficient. This money could be better allocated elsewhere in the economy. This economic inefficiency is a major driver behind the push to eliminate penny circulation.

Increased Transaction Efficiency

• Faster transactions: Removing pennies would speed up cash transactions, particularly in high-volume settings like retail stores and fast-food restaurants.
• Reduced handling time: Cashiers and consumers would spend less time counting and handling small change.
• Rounding up or down: A transition to a system of rounding up or down to the nearest nickel would streamline transactions and improve efficiency, mirroring successful models in other countries like Canada and Australia. This simplification would benefit both businesses and consumers.

Environmental Concerns Surrounding Penny Production

Beyond economic concerns, the environmental impact of penny production is a compelling reason to consider its elimination.

Resource Depletion

• Zinc and copper mining: Pennies require significant amounts of zinc and copper, both of which are mined using energy-intensive processes, causing environmental damage and contributing to carbon emissions.
• Energy consumption: The entire production process, from mining to minting, consumes substantial energy resources.
• Reduced environmental footprint: Eliminating penny production would significantly reduce the demand for these resources and decrease the overall environmental impact.

Waste Reduction

• Landfill waste: Millions of pennies end up discarded each year, contributing to landfill waste and the depletion of valuable resources.
• Recycling challenges: While pennies are recyclable, the cost and complexity of recycling such small amounts of metal often outweigh the benefits.
• Sustainable alternatives: Focusing on digital payments and higher-denomination coins reduces the overall volume of waste generated by currency circulation.

Public Opinion and Potential Challenges

While the economic and environmental arguments are strong, the potential elimination of the penny faces significant public opinion challenges.

Sentimentality and Nostalgia

• Cultural significance: Many Americans have a sentimental attachment to the penny, viewing it as a piece of American history and a symbol of thrift.
• Public resistance: This sentimental value could lead to public resistance against its removal, requiring careful management of public perception.
• Preserving history: Arguments for preserving the penny often focus on its historical significance and cultural value.

Transition and Implementation Strategies

• Gradual phase-out: A phased approach to removing the penny, allowing for a gradual adjustment period, could ease the transition.
• Public education campaigns: Clear and comprehensive public education campaigns are crucial to manage public expectations and address concerns.
• Solutions for small change: Strategies for handling small change in transactions, such as rounding, need to be clearly defined and communicated.

International Precedents for Eliminating Small Coins

Many countries have successfully eliminated small denominations of currency, offering valuable lessons for the US.

Success Stories from Other Countries

• Canada: Canada's elimination of the penny in 2013 provides a strong case study for a successful transition, highlighting both the benefits and challenges involved.
• Australia: Australia’s experience offers further evidence of the feasibility and effectiveness of eliminating small coins.
• Best practices: Examining the successful strategies employed by these countries can inform the development of effective implementation plans for the US.

Conclusion

The arguments for eliminate penny circulation are compelling, combining significant economic and environmental benefits. While public sentiment and logistical challenges exist, the experiences of other countries demonstrate the feasibility of such a transition. A well-planned strategy, including public education and clear implementation guidelines, is crucial for a smooth transition. The debate surrounding the elimination of penny circulation is complex, but the potential economic and environmental advantages are significant. Let's continue the conversation about the future of the penny and explore viable solutions to this issue. Join the discussion on the future of eliminating penny circulation and penny elimination.