The government is always looking to save a few pennies. Turns out, the best way to save a penny is to stop making them. The US Mint presented a 40 page report to congress today saying that a penny now costs more than two cents to make and distribute.
The penny isn’t the only coin whose manufacturing cost is greater than its value. The nickel, according to the US Mint, costs more than 11 cents to make and distribute.
The Mint conducted two years of trials in an attempt to find a metal recipe that would make pennies and nickels cost effective. More than 29 different alloys were tested, but the Mint could not find a recipe that worked.
According to the Associated Press, the Mint ran into several problems while trying to find a cost effective coin. For one, the Mint had to change the metal formula while maintaining the same electromagnetic properties of current coins. The vending industry estimated that it would cost between $700 million and $3.5 billion to recalibrate machines to recognize a new coin with different magnetic properties. The Mint said that it would cost about $500 million.
The mint also had to deal with the rising cost of copper and nickel.
Dick Peterson, the Mint’s acting director, said:
“Pricing of steel, aluminum and zinc are pretty close to each other … there are promising alternatives for the nickel, dime and quarter. There wouldn’t be any advantage to shift the composition of the penny, so we offset that cost with (savings from) other denominations.”
So why not just get rid of pennies and nickels? Peterson said that pennies are still in high demand. The US Mint produces more than 6 billion pennies a year. That’s $60 million dollars. But since a penny costs more than two cents to make, that $60 million actually costs more than $120 million.
Coins aren’t the only expensive thing that the Mint produces. Government auditors said earlier this year that the government could save $4.4 billion over the next three decades if the dollar was replaced by a dollar coin.
Canada recently decided to get rid of their pennies. The Canadian government expects to save about $11 million per year now that they no longer have to make pennies.
Do you think the United States should get rid of the penny?