Pennies or

Problems?
The Public Policy Debate to Eliminate the Copper Coin
from Currency

Makendra Patzer
April 5, 2019
 Pennies or Problems? 2

Abstract
The following report outlines the controversial public policy of removing the penny from
circulation. Although there is still much debate, the U.S. Treasury is planning to cease making
pennies in spring of 2020 and will legally allow businesses to refuse the coins as payment. The report
outlines the data provided by economic sources that explore the pros and cons of eliminating the
penny.
 Pennies or Problems? 3

Table of Contents
......................................................................................................................................................... 1

Abstract .......................................................................................................................................... 2

Introduction ................................................................................................................................... 4

Methodology .................................................................................................................................. 4

Stake Holders ...........................................................................................................................................4

Stasis Theory ............................................................................................................................................4
Each of the sources cited were chosen based on a portion of Stasis Theory to ensure their
relevancy and timeliness to the public policy discussion. ....................................................................4
Data Gathering .........................................................................................................................................4
Results/Discussion ....................................................................................................................... 5

Conjecture .................................................................................................................................................5
Definition ..................................................................................................................................................6
Value .........................................................................................................................................................6
Action ........................................................................................................................................................9
Conclusion ..................................................................................................................................... 9

Bibliography ................................................................................................................................ 11
 Pennies or Problems? 4

Introduction
Love them or loathe them, the copper penny in of U. S. currency is the most talked about coin
While most pennies are rattling in coin purses and savings jars, charities and lower classes still rely
on coins including pennies for currency. With the rise of the price of mining and the impact on the
environment make experts wonder is keeping the penny as currency is a smart financial decision for
the U.S. There are several significant points to eliminating the penny. The penny costs almost twice
its value to create. 2% of Americans admit to throwing pennies in the trash or not bothering to pick
them up (ProCon.org). Yet, the elimination of the coin may cause more problems including upping
the cost of living and impact charitable giving. The following report presents both sides of the
argument with evidence following by a conclusion that interprets the data.

Methodology
Stake Holders

The stakeholders on this topic is the U.S. Government, U.S. Treasury, businesses, non-profits, and
most citizens of the United States. The U. S. Government’s functioning is determined by the
amount of money generated from taxes each year. The U. S. Treasury is in charge of regulating and
creating new coins for circulation which means they are directly in charge of keeping the penny in
working order. Business rely on pennies for profits. Rounding up or down to convert the penny into
a higher coin could create losses for all citizens. Non-profits rely on the use of the penny through
donations and fundraisers to support their own efforts and causes.

Stasis Theory

The data for this report was gather using the method of Stasis Theory. The theory has four
components: conjecture, definition, value, and action.

- Conjecture is used to decide if the issue is an actual issue.

- Definition defines how the issue.
- Value is the agreement on what is deemed important to the issue.
- Action proposes and discusses what needs to take place to address the issues of the debate.

Each of the sources cited were chosen based on a portion of Stasis Theory to ensure their relevancy
and timeliness to the public policy discussion.

Data Gathering

The data of this report was gathered using Evernote.com to organize and cite sources. The primary
sources were found online via U of Idaho’s online library resources and Google Scholar. The
popular sources and public comments were found using government websites and press releases.
Most of the comments were found from newspaper articles and personal blogs of individuals
supporting a penny elimination or a penny keeping side.
 Pennies or Problems? 5

Results/Discussion

Conjecture

Conjecture is a part of Stasis Theory that determines if an issue is actually an issue. It also looks at
whether the facts are accurately presented.

As with most issues concerning money, public lawmaker and officials are torn on the decision to
eliminate the penny from circulation. Andrew Keinsley, who wrote a report on whether the penny
should eliminate, has determined that the penny’s elimination would not cause damage to the
economy or to consumer’s pockets. However, there is still much debate concerning in the past. The
results of that elimination have been analyzed by experts to determine if the change in currency was
helpful or hurtful to the economy. In the mid 19th century, the United States eliminated a coin when
its value to manufacture no longer was feasible to maintain. “For example, the United States
government eliminated the half-cent coin in 1857, an action that would be analogous to eliminating
the dime today. As far as I can tell, there were no serious consequences to this action” (Keinsley).
One expert purposes that the elimination of the half penny coin in 1857 would have the same
benefits as eliminating the penny.

One of the biggest concerns for consumers is the projection for the rise in cost of prices if the
penny is eliminated. “The inflationary impact of rounding will probably be small. How even a small
effect will cumulate over time to a considerable sum” (Lombra, p. 433). Experts agree that even if
the penny is not eliminated, the United States Treasury will need to figure a more cost effect way to
create a one cent coin. “But even though the Treasury has been studying new metals since 2010, it
has yet to come up with a workable mix that would definitely be cheaper, and it has no details yet as
to what metals should be used or how much it would save to do so” (Santa Barbara). As more than
twice its own value to manufacture, the penny’s value is too costly to maintain unless a new method
or material is substituted.

Americans for Common Sense (ACC) is a group determined to see that the penny’s is kept in
circulation. They believe that the coin is useful and is still beloved by most people. A survey
conducted by the group found that 67% of Americans are in favor of keeping the penny in
circulation (Weller). "These results confirm the strong and unwavering support the penny continues
to receive from America," said Mark Weller, Executive Director of ACC. He believes that the
penny’s elimination would put too much pressure on the nickel, which costs even more to mint.
“From a budget standpoint, it’s hard to see how you save money by eliminating the penny and
making more costly nickels,” Weller said.

Many for eliminating the penny believe that common sense of keeping the coin around does not
outweigh its usefulness. “Today, there’s literally nothing you can buy with a single penny – and you
can’t do much else with it either. Vending machines don’t accept them, and neither do most parking
meters” (Livingston). The actual value of the coin is one of the main factors in the debate for
keeping the coin out of circulation. “Picking up a penny from a sidewalk and putting it in your
pocket pays less than the Federal minimum wage if you take more than 4.9 seconds to do it” says
anti-penny columnist David Owen (Mitchell). Those against the continuation of creating the penny
argue that it’s lack of usefulness in everyday life is an adequate argument for eliminating the coin.
The debate on the penny’s usefulness has been debated in Congress in recent years. “Representative
 Pennies or Problems? 6

Jim Kolbe of Arizona has twice introduced bills in Congress to eliminate the penny, and in February
2014, President Barack Obama argued during a YouTube chat that pennies were obsolete and a
symbol of U.S. government waste” (Livingston). Politicians are as torn as the citizens they represent
on the penny’s status.

Definition

Definition according to Stasis Theory is known as looking at how a problem is defined and if the
definition is applicable to the problem. Experts on the subject should be in agreement on the
definition of the problem, but not necessarily the solution to the problem. The definition should
limit the problem so that it is focused, but no so much that there is a clear right or wrong answer.

Pennies are one cent coins made from 97.5% zinc and 2.5% copper (UCSB Geography). “The
penny was the first currency of any type authorized by the United States, and for over two centuries,
the penny's design has symbolized the spirit of the nation, from Liberty to Lincoln” (Moraschools).
The penny itself has been a part of the United States’ history and currency from the beginning. The
sentiment value of the coins have people clinging to the coin as a part of currency. Phil Mussel is
the direction of Coin News which is a United Kingdom publication that is an advocate for keeping
coins as a part of currency. He believes that the penny should be kept because of its sheer weight in
history. When asked for commenting, Phil said, ’People pick on the penny unnecessarily”
(Hebblethwaite). Phil is not the only one in sentimental support of the coin. “A 2014 poll by
Yougov.com found that 51 percent of Americans want to keep it” (Amadeo).

In 2018, UCSB Geography did a report on the number of pennies minted in previous years. The
purpose of the report was to analyze the practicality of pennies based on their cost of production
and usefulness. The cost to manufacture is “2.4 cents to make one penny in 2011 and about 11.2
cents for each nickel” (UCSB Geography). Minting a penny costs about twice its value and the same
argument can be used for creating the nickel. Materials to process coins have risen due to inflation
while the coin’s value itself has remained the same for over a hundred years. Now that the cost of
actually creating the coins exceeds their value, there is a question whether coins should continue to
circulate. According to Jim Turner, “it’s just a silly coin to have,” (Hebblethwaite).

Value

Value, according to Stasis Theory, is when the

fact gathered supporting and not supporting
the argument are analyzed. Value is the
opportunity for both sides to state their
arguments of the issue.

According to Jeff Gore, an MIT professor and

the author of “Retire the Penny”, the penny
has outlived its functionality as claimed in
Figure 1. “Let’s retire it,” Gore said (Gore). Figure 1. The group, “Retire the Penny”, is run by
The U. S. economy is reliant on the spending economists from acclaimed universities. They believe that
eliminating the penny would be good for the economy.
of its citizens. According to some
 Pennies or Problems? 7

government officials, the penny’s usefulness has come to an end. “The fact that these coins cost
more to produce than their face value can have some bad consequences” (Keinsley). The bad
consequences would come at the cost of the spending of citizens. Eliminating the penny would
cause business to most likely round-up their prices on their goods. Penn State’s Raymond Lombra
of Penn State estimates that eliminating the penny would cost close to $600 million a year from
upcharges in buying goods. The change in prices would affect the Consumer Price Index (CPI)
which would affect all government associated programs and spending (Livingston). Government
programs affected would include Social Security, Medicaid, and Medicare. The rounding up of costs
would affect the lower classes more than upper middle class and upper classes. The lower class is
dependent on government programs to provide them with aid. Also, the lower class is more likely
to use paper money than credit cards. “Moreover, since the poor and disadvantaged use cash more
than the rich, the rounding tax would fall disproportionately on them” (Zagorsky). Most monetary
transactions are conducted in payments that aren’t physical money. “The reality is that about 25
percent of all transactions are now in cash. The other 75 is in electronic forms of one type or
another,” Diehl said (DiChristopher). Credit cards are lighter to carry around. They take less time to
handle which, in a study conducted by the Federal Reserve Bank in 2012 found that there is actual
amount of time being saved by not using the coin. Most of this time comes from the fact that most
people conduct “23 cash transactions in a single month” with comes to about “48 million hours
wasted each year” in the United States (Livingston). Fishing out pennies for payment is costing
time.

Elected officials have their own opinions concerning the penny’s status. "The penny has been a
nuisance for years," said Kolbe (R-Arizona) at a press conference on Tuesday, "but now that the
cost of a penny exceeds its value, the landscape of the debate has completely changed" (Zappone).
Former President Barack Obama declared the penny useless when asked about his stance on the
coin (Livingston).

Some businesses are in favor of eliminating the penny and are trying to implement change in their
transactions with customers. Chipotle believes that by eliminating the penny from their cash
registers and refusing the accept the coin, they are actually saving their customers times at the
checkout lines (Mattson). Recently, Chipotle has come under fire when a lawsuit was filed against
them for rounding the change they gave back to their customers after purchasing food. Other
customers don’t mind rounding their expenses. Business now offer dishes where people can opt to
leave their pennies rather than taking them. “When people start leaving a monetary unit at the cash
register for the next customer, the unit is too small to be useful. It’s just wasting people’s time—the
economy’s most valuable resource,” said Greg Mankiw, the Chairman of Economics at Harvard
University (Gore). Even the former US. Mint Direction Phili Diehl argues, “Why would you irritate
the customer over a penny?” (DiChristopher). There is another point for leaving pennies behind.

Anti-penny grounds argue a practical reason as well. “Pennies are heavy to carry around. Each one
only weighs 2.5 grams. But $1 worth weighs 8.8 ounces, about half a pound” (Amadeo). Pennies are
argued to be literal weights in people’s pockets, rather than useful monetary means. This lack of
usefulness is costing the U. S. Treasury in other ways as well. “Two percent of Americans admitted
to regularly throwing pennies in the garbage, which means the US Mint is spending millions to make
garbage,” said John Oliver (ProCon.org). A piece of money that means so little to people is filling up
wastelands. Pennies are also losing their value overseas. “The U.S. military has already eliminated the
penny in its overseas bases. It uses disc-like certificates called POGs” (Amadeo). Since the United
States still counts pennies as currency, the military bases must also, but they eliminated the weight
 Pennies or Problems? 8

problem with certificates.

Metal is needed to create new pennies. Environmental groups argue that the pollution of mining
toxic metals is taking a toll on the environment. Pennies today are made with a mixture of zinc with
a layer of copper over it. “Zinc ores contain only 3% to 11% metallic zinc. Along with the zinc, the
ores usually contain other metals, including toxic metals like cadmium and lead”(Livingston). Zinc
mining is not easy on the environment. “It leaches into the surrounding soil and streams. It gets into
the food stream and could cause health concerns” (Amadeo). The production of the pennies
themselves cost an immense amount of energy. Zinc must be extracted from ore before it can be
rolled into sheets and then the coins are stamped from that roll (Livingston). This doesn’t include
the cost to transport the pennies to banks to start circulating. “The U.S. Mint made 8.426 billion
pennies, costing taxpayers $68.8 million”
(Amadeo). Today, pennies cost about two
cents per coin to make which is actually
down thanks to a conscious effort by the
government to lower the exchange rates on
mined metals (Santa Barbara).

Charities are torn on the issue. Some

charities are proving to be pickier on
accepting some forms of monetary
donations. Not every charity is like this. The
Salvation Army and UNICEF rely on
pennies from penny drives to rally support
for their causes while others refuse to Figure 2. Pennies still add up to dollars, and dollars are
accept the coinage (Amadeo). “Pennies are still valued. Charities still rely on donation, even in the
easy to ask for and easy to give,” said the form of one cent coins, to support their causes.
creator of nonprofit Good Cents for
Oakland, Dagmar Serota (ProCon.org). Pennies are commonly found and easily given to jars and

Penny Picker Uppers

Figure 3. The chart visually

shows that the penny is still
of some value to most
Americans. Those that take
the time to pick up a one
cent coin still deem it
necessary and valuable.

71% of people still pick up pennies when they find them on the ground.
21% of people said they do not pick up pennies they find on the ground.
 Pennies or Problems? 9

open hands. Their accessibility has endeared them to many, making it the most sentimental coin the
U. S. uses. Their value does add up as demonstrated by Figure 2. More than half of all Americans
believe the penny should stay in circulation. As demonstrated in Figure 3., 71% of people survey
said they are still willing to pick up pennies from the ground when they find them (Amadeo). More
than half of consumers take pennies when offered as change during cash transactions (Amadeo).
Mark Well, an executive director of ACC said, “These results confirm the strong and unwavering
support the penny continues to receive from America,” (Weller).

Action

Action, in according to Stasis Theory, discusses what both sides propose to do in order to fix this
issue. The facts from the preceding parts of Stasis Theory should support the judgements deemed
by both sides of the argument as a way to fix the problem.

Those in support of eliminating the penny have already proposed actions to do so to the coin in the
coming years. In 2018, the U. S. Mint made an announcement. “The US Mint announced this
morning that they will phase out the production of new pennies beginning in late 2019, and mint the
last batch of pennies on April 1, 2020” (Guina). There are skeptics that the U. S. Mint will actually
follow through on this change in coinage. The editor of Hotline, Chuck Todd has stated, "The only
time these coin bills are successful is when you create a collectible" (Zappone). Congress is planning
on creating a collection of specially designed pennies to commemorate the coin’s service over the
years. Meanwhile, the government has already decided to begin the process of cycling out the coin.

However, the penny’s disappearance does not mean that the problems it created goes away. Groups
for that support keeping the penny propose the following ideas. Not all of the solution involve
changing the penny. They propose adjusting the use of other coins instead. The nickel is often
mentioned in terms of cost to produce. It too is one of the more expensive coins to make at twice
its value. Some suggest changing the composition of nickels to lower costing metals so that the coin
will be profitable for the U. S. Treasury (DiChristopher). Others suggest opting instead for a one
dollar coin, since one dollar bills are less substantial than metal coins. “The United States is the only
developed country that still uses $1 bills. But they wear out after a year or so. On the other hand, $1
coins can last 40 years” (Amadeo). Other critics believe that end of coins of is more likely. Phil
Mussel also remarked on the future of coins. “We are more likely to see the end of coinage in
general, than we are to see the end of the penny” (Hebblethwaite). Those in favor of keeping the
penny agree that the coin holds too much sentimental value to discontinue. Instead, they favor
changing other, less sentimental, forms of physical money.

Conclusion
The majority of the evidence collected was in favor of eliminating the penny. However, much of the
evidence to eliminate the penny did not provide solutions for the sort of economic downfall there
may be afterwards. The main arguments determine that pennies contribute to toxic pollution, they
hold little to no value, they are a nuisance, and they represent a way of America.

Evidence for keeping the penny is based largely on two factors. One reason to keep the penny is to
counteract the affect its elimination would have on the poor and disadvantage since most of their
transactions are still made with cash. The penny also holds significant sentimental value for
 Pennies or Problems? 10

Americans. It’s history and design has changed only slightly since Abraham Lincoln was stamped on
in in the beginning of the 20th century. And, its longevity as America’s oldest coin makes it hard for
penny lovers to let go.

The evidence for eliminating the penny is overwhelming. The U. S. Mint needs to find a
compromise that allows pennies to still circulate without impacting the poor or endangering
America’s most loved coin. The best method would be to find a solution of a new metal that could
uphold the coin’s value without sacrificing environmental needs or sentimental. There is evidence
that paper and coin money will slowly discontinued from cycling in the coming years. Nearly three
out of four purchases use either electronic app or credit cards as a form of payment. As more people
rely on electronic forms of payment through the use of smart technology, the actual need for
physical money will decrease. There are two solutions to the penny debate. Either a new, cheaper
metal is found, or the U.S. Mint relies on time and modern technology to overcome the use of
physical money eventually wiping out its use altogether.
 Pennies or Problems? 11

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 Pennies or Problems? 12

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