NEW YORK–The ongoing shortage of coins has led to everything from some banks paying a premium for change to a government task force making its own recommendations.
It has also led to new debate around why the penny remains in circulation.
“The shortage has led to renewed discussions about the fate of the penny, which has seen its purchasing power fall because of inflation while its production costs have risen,” noted the New York Times.
“I hate pennies,” Sunde White, a small business owner in San Francisco, told the Times, adding that they are so useless that she usually throws them on the ground when she gets them back as change. “They’re so stupid.”
Even before the coin shortage, White had already priced her greeting cards and coloring books at 50 cents or $1 increments for sales at festival stands to save the inconvenience of having to use pennies, she told the Times.
Losing Money
The Times noted that given the economic crisis facing the United States, the government could use the money it would save by ending the production of pennies for more important causes, she said. The Mint manufactured more than seven billion pennies in fiscal year 2019, at loss of nearly $70 million.
Other countries that have stopped making pennies include Canada, Britain and Australia.
“Each penny costs about two cents to produce, according to a 2019 report by the United States Mint. Pennies accounted for 59% of the 12 billion coins the mint manufactured last year,” the Times reported.
But the penny also has its supporters, with some people buying pennies for sentimental purposes and Americans for Common Cents, an advocacy group that provides research for Congress on the value of the penny, arguing older pennies are made mostly of copper, which is antimicrobial.
“Penny proponents also argue that eliminating pennies would amount to a one-cent sales tax for consumers because prices that end in 99 cents are common,” according to the Times.
Robert Whaples, an economics professor at Wake Forest University, told the Times his research, which examined data from a chain of convenience stores, found customers ended up breaking even over time because prices were rounded down as much as up, considering people buy multiple items and when accounting for tax.
‘Seize the Issue?’
“Right now, with the coin shortage, is a good opportunity to seize the issue,” he said, telling the Times pennies should be eliminated from circulation.
But N. Gregory Mankiw, an economics professor at Harvard University, told the Times, “Of all the issues we face, this is probably not a front burner one at this moment.”