Philip Diehl, the president of US Money Reserve, gave his opinion on the continued circulation the penny to PR Newswire on January 26.
While some people may enjoy picking up spare change it can not be denied that the value of the penny has gone down significantly over the years. If a person was to take the time to bend over and scoop one of these coins off the ground today they would be getting paid less for their time than working at a minimum wage job. What makes these infinitesimally small valued coins seem like an even worse idea is the fact that they cost much more to produce than they are worth. In fact, production of pennies costs American taxpayers $105 million each year.
Those who wish to keep the penny in circulation likely have their own best interests in mind as the largest proponents are members of zinc lobbies and those who assist in the production of the coin. One of their most popular arguments is stating that if the penny were no longer in use then companies would be forced to raise prices on consumer goods. In turn this would result in inflation. In a completely cash-based economy this statement may have been true, however in today’s world over three quarters of transactions take place thanks to technology and cash is rarely used. This could allow prices to remain the same when paying with cards. Furthermore, Diehl asserts that many companies would likely round their prices down a couple of pennies in order to try and gain a competitive advantage.
Others still propose that if the penny is to be taken out of circulation, why not the nickel which costs 9.4 cents to produce. The counter argument here is that the nickel could still be reformatted in order to cost less and eventually become profitable, but the penny is already made of 97.5 percent zinc making this impossible.
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