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A Penny Costs Two Cents To Make, Says US Mint

us pennies

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?

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Comments

11 Responses to “A Penny Costs Two Cents To Make, Says US Mint”

  1. Brian V. Sitterley

    Probably should get rid of pennies, with law on how to round up or down, and convert to dollar coins. Canada set an example on how this can be done effectively.

  2. Paul Leard

    So now we should consider the penny as (2 cents) when spending. WHEN ARE WE GOING TO GET RID OF THIS 'FIAT' MONEY SYSTEM. This is more proof how the current economy doesn't work for allmost everybody.

  3. Robert J. Wolfe

    update to 10c & be done with it. everything to the nearest.25c would be fine with me.

  4. Anonymous

    Other countries replaced their lowest banknotes with coins years ago. How did they do it? Easy they stopped printing the bills. Here in the US we keep introducing dollar coins and we hope they catch on but we still keep printing singles. People wont embrace any $1 coin if there are still dollar bills. Stop printing singles!

  5. David Lilley

    One way to help dig us out of debt would to overhaul the monetary system.Do away the penny and at least the one dollar note.There is a space in cash register drawers for Dollar Coins already.You first have to put the dollars coins in and gradually take out the dollar bills and make coin bigger than a Quarter.Maybe add some color so you don't get it confused with a quarter.

  6. Anonymous

    Why would you get rid of the Penny then round up or down? do you people know how much more you will be spending, I promise you as an entrepreneur, I've just thought of five more ways to make you people pay more for my product if they get rid of the penny a nickle, and forget the road of riches, I'll be on the belt to wealth! I hope they do matter of fact because they say Americans never understood the value of a penny, and much less a dollar. (no pun intended) I think I want to move to Italy or maybe even Japan or Russia.