No Pennies After 2011… Really?

May 12, 2010 by · Leave a Comment
Filed under: Economics, Kindergartners 

It went over the blogosphere over the last month that the US Mint would be stopping production of pennies altogether in April 2011…

My son’s Kindergarten teacher even told their class that pennies were no longer going to be minted after next year.

The argument is that it is more expensive to make pennies than pennies are worth.

I completely believed this.  My son did too.  My husband did too.

And then we were all informed by my son’s Kindergarten teacher that it had been an April Fool’s Joke… (and she had believed it too).

I felt really dumb, I must say.

Getting rid of the penny?  How can we get rid of the penny?  But then I looked into it… and it makes some sense.

According to Wikipedia–  “As of March 2008, it costs about 1.7 cents to mint a penny. 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.”

AND- “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. is about $3.65 per person annually, about $1 billion for all America. Using a different calculation economist Robert Whaples estimates a $300 million annual loss.”

PLUS- “Pennies are not accepted by all vending machines or toll booths, and pennies are generally not accepted in bulk. In addition, people often do not use cents to pay at all; they may simply use larger denominations and get pennies in return.  Pennies end up sitting in jars and are not in circulation. Economist Greg Mankiw says that ‘The purpose of the monetary system is to facilitate exchange, but… the penny no longer serves that purpose’.”

AND- Prices would not be higher — “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 effect. Consumers would gain a tiny amount – about 1/40th of a cent per transaction.”

PLUS, and us moms know this- “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 furthermore, zinc and copper digested from the lodged pennies may be toxic. A five kilogram dog was fatally poisoned by swallowing two pennies.”

And One More thing- Did you know that in 2002 bills went through Congress to try to eliminate the PENNY?

A Penny For Your Thoughts?

Or should I Say,

A Nickel?

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