Pennies Have Their Place

One academic says to leave the humble one-cent piece alone.

August 25, 2017

WASHINGTON – Will the penny finally end its run as our lowliest form of currency? Jay Zagorsky with The Ohio State University sincerely hopes not, The Conversation reports. While it does cost more than one cent to produce, the penny has a long history in the United States, being the first currency of any kind to be authorized by the federal government in 1787 (although it wasn’t until 1856 that the penny became legal tender).

In March, Sens. John McCain (R-AZ) and Mike Enzi (R-WY) sponsored a bill to stop minting pennies, among other tweaks to U.S. currency. Already, the Army and Air Force have stopped accepting pennies on overseas military exchanges.

In 2006, NACS estimated that handling pennies increases cash transaction time by 2 to 2.5 seconds. If each U.S. adult had a single cash transaction each day, that would translate into more than 60 million hours spent handling change.

Keeping pennies means merchants aren’t rounding up or down to the nearest nickel. Retailers in penniless countries like Canada, round up when the cost is $1.03 or $1.04 and round down when it’s $1.01 or $1.02. The problem is that retailers set their own prices and merchants could make an extra few pennies per cash transaction.

And as Chipotle Mexican Grill found out in 2012 when it attempted to speed up service by rounding up or down to eliminate pennies, customers were angry at receiving fewer pennies back.

A convenience store in California eliminated the penny last year. It was featured in the 2016 Ideas 2 Go video program.

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