NEW YORK - The lowly penny isn€™t getting much respect these days. Long gone are the days when the one-cent coin had purchasing power all on its own (remember the penny candy at the corner drugstore?). Now that neighbor Canada has officially stopped minting its penny, some economists are calling for the United States to follow suit and shelve the one-cent coin, CNNMoney reports.
It costs the U.S. Mint 2 cents to make and ship each penny€"last year, 5.8 billion of them were minted. Consumers often don€™t bother with pennies as change, either. "When people start leaving a monetary unit at the cash register for the next customer, the unit is too small to be useful," said Greg Mankiw, who chaired the President€™s Council of Economic Advisers under President George W. Bush.
Retailers wouldn€™t mind rounding to the nearest nickel to save time for cashiers and customers alike, but merchants are not ready to do that for fear of consumer backlash. "Yes it would speed up transactions, and yes that is good," said Jeff Lenard, NACS spokesman. "But if it€™s a convenience that the customer doesn€™t want, we€™re not going to question the consumers€™ decision."
Penny supporters like Americans for Common Cents point to polls like the one last year that showed two-thirds of Americans would keep the one-cent coin. Robert Whaples, who teaches economics at Wake Forest, conducted his own study by evaluating thousands of convenience store transactions. He found that consumers on the whole would come out even if retailers rounded to the closest nickel.
"The main argument against the penny is that it wastes our time," said Whaples. "We€™re clearly losing money on the penny."
Despite the fact that other countries have eliminated the lowest denomination coin without trouble, Americans still like the penny. "The vast majority want to keep a penny, regardless of all the good arguments against it," said Whaples. "It€™s a sentimental attachment."