Why Is A Penny Important

A Penny For Your Thought Everyone at least once in their life has heard the rhyme, “Pick a penny up and all day long you’ll have good luck.” What if I told you that the fun rhyme you have heard since you were a child is more of a lie than you would think. In reality to see a penny and pick it up is more of a burden than a way to grant you good luck for the rest of the day. If anything the penny should be a symbol of bad luck. The United States should simply eliminate their penny because it costs more to manufacture than its face value, other countries have done so without undesirable consequences, and the fear of “Rounding Tax” as a result of the pennies elimination is nothing to worry about.
A commonly discussed reason for getting rid of
the penny has been that the price of manufacturing the penny is currently higher than the pennies face value. “ The government continues to mint four billion pennies every year, even when it costs 1.8 cents to mint just one penny.” According to an article published on www.pbs.org. The pennies face value is one cent, yet we are paying close to two cents to produce them. The PBS article was published in 2013 when to the US mints reported the pennies price went down by 31.1 percent from previous years, when the price of producing a penny was 2.4 cents. All these numbers may not seem like a significant amount of money, but when you add them up, the numbers became a lot more concerning. According to CNN, the government would save 11 million dollars a year if the manufacturing of the penny was stopped. Which is far too much to spend on something the American people view as almost worthless. Many people go to zoos or amusement parks and use the penny press machines to put images into pennies even though this act is against Federal Law. It is a Federal crime to destroy the currency in any way that would render it unfit for circulation, which is exactly what the penny presses do. Yet they are everywhere and no one seems to be bothered by it because we view the penny at such a low worth. So, it is absurd that we would spend up to 4 billion dollars a year to manufacture them. Many people view the problem of spending too much on the penny as having a simple solution: make the penny out of less expensive material. Yet, according to Congress that is not possible. Congress has reported that “The U.S. Mint hasn't identified a metal composition cheaper than zinc, which makes up 97.5% of every penny.” This means that there is no way the US government can reduce the cost of manufacturing the penny. The cost of the penny completely depends on the price of zinc and the other materials used in manufacturing it. That means that when the price of zinc goes up, in effect, the price of manufacturing the penny goes up. Since the cost of minting a penny is already above its unchangeable face value of one cent (as well as there being no cheaper metals to make the penny out of), the cost of making a penny will never produce a profit unless zinc becomes less valuable than one cent.
Many other countries such as New Zealand, Canada, and Australia have already seen the benefits from eliminating the manufacturing of the penny and other countries are following suit.
Although it seems that many people fear an economic collapse if the U.S. was to follow the example of these countries and stop using the penny. “Sweden seems to be getting along fine. New Zealand and Australia no longer have one-cent pieces or two-cent pieces and economic collapse has not happened” (goodcents.co.nz). This means that all these countries have gotten rid of their pennies and have not faced an economic collapse or any economic trouble that resulted from the elimination of their penny. New Zealand even took it one step farther and stopped production and usage of their nickel. Even the US Department of Defense has stopped using the pennies at their overseas bases for more than 30 years and they have not faced any detrimental backlash as a result of it. None of these countries have had problems with their decisions about eliminating their pennies. It would not be difficult for the United States to stop using the penny. “The Coinage Act of 1965 states that there is no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash, unless there is a State law which says otherwise.” as stated by the US
Treasury. This means that if an individual was to walk into a store and hand a clerk a 100 dollar bill the clerk could refuse to accept that form of currency as a form of payment. This scenario would also work for an individual wishing to pay with pennies. There are many stories where an individual has gone into a place of business and tried to pay with pennies out of spite and then was told that the establishment will not accept the pennies. This also means that if the U.S. was to stop production of the penny, there would be no legal repercussions in phasing out the penny. If the penny was no longer manufactured, its circulation would dwindle gradually instead of drastically. The gradual dwindling of the penny would ease in the phasing out process for consumers and service providers. In conclusion, there would be no struggles for businesses, persons or organizations to manage with the changes as stated in the quotation above.
Though there are many things citizens of the U.S.
are concerned about regarding the elimination of the penny, the price of goods as the result of “Rounding Tax”, is one of the biggest. “Rounding Tax” is the rounding of the cost to purchase products are rounded to the nearest nickel instead of the nearest penny. Their hesitation is understood, though rash and unsupported by facts. For example, many persons fear that if the penny was eliminated in return the “Rounding Tax” would affect poor neighborhoods more than rich neighborhoods. According to a study done by Robert M. Whaples, professor of economics at Wake Forest University, Whaples also “compared a store in a wealthy neighborhood and one in a poor neighborhood of the same city and found that rounding prices has the same effect regardless of the consumer base's socioeconomic status.” This proves the fears that less affluent neighborhoods will be effected greater than more affluent neighborhoods is false, meaning that any effects of the “Rounding Tax” would affect those in different socioeconomic status the same. According to Whaples’ same study, he found that the only people to be affected by “Rounding Tax” in any significant way were individuals who paid cash for purchases that were less than one dollar and ended in a nine. The only prices that would fit that criteria would be; .09, .19, .29, .39, .49, .59, .69, .79, .89, and .99. Almost nonexistent amount of people would be affected by “Rounding Tax” because those
specific purchases are rather rare. Another reason the “Rounding Tax” should not a cause for concern is because we live in a very technologically advanced society. In an article published by the Canadian Mint “Only cash transactions require rounding. Cheques and transactions using electronic payments—debit, credit and payment cards—do not need to be rounded, because they can be settled electronically for the exact amount.” The only time you would have to truly pay attention to “Rounding Tax” is if you are paying with cash for your purchase. Yet, many people use credit cards or many other forms of electronic payments to purchase items. So, most people would not even know the difference if the penny was eliminated unless they were to purchase an item with cash and if that item was less than one dollar and ended in a nine. Now you can truly understand how the fun little rhyme we learned as a child is just a way for the American people to create an excuse to keep the penny around no matter how much more good fortune the U.S. would gain from eliminating it. The penny costs more to manufacture than it will ever be worth. Other countries have eliminated it and succeeded and as for the “Rounding Tax” there is nothing to fear. So, I propose a new rhyme to replace the old “ Leave the penny on the ground, you'll make more money all year round”

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