You probably have a jar of them. Or maybe a cup in your car's console filled with sticky, copper-colored discs that you haven't touched since 2022. It’s weird, honestly. We are living in an era of instant digital payments, tap-to-pay credit cards, and decentralized finance, yet we are still hauling around a piece of zinc that is technically worth less than the effort it takes to bend over and pick it up off the sidewalk. Getting rid of the penny has been a circular debate in Washington for decades, but every time it gains momentum, it seems to vanish into the couch cushions of bureaucracy.
It costs the U.S. Mint about 2.7 cents to produce a single one-cent piece.
Think about that for a second. We are literally losing money to make money.
The Mathematical Nightmare of the One-Cent Piece
The economics are pretty brutal. According to the U.S. Mint's 2023 Annual Report, the agency lost over $90 million just manufacturing pennies. This isn't a new problem, either. The "mintage cost" has exceeded the face value of the coin every single year since 2006. If a private business operated this way—spending nearly three dollars to produce a product they sold for one dollar—they’d be bankrupt before the end of the first quarter. But the government isn't a business.
Why does it cost so much? Commodity prices. While we call them "coppers," the modern penny is actually 97.5% zinc with a thin copper coating. When global zinc prices spike, the taxpayer foot the bill.
There's also the "time tax." Robert Whaples, an economics professor at Wake Forest University, has famously argued that the time spent fumbling for pennies at cash registers costs the U.S. economy hundreds of millions of dollars in lost productivity. It's only a few seconds per transaction, sure. But multiply those seconds by billions of transactions across 330 million people. It adds up to a staggering amount of wasted human life.
What Happened When Canada Killed the Penny?
We don't have to guess what happens if we stop minting them because our neighbors to the north already did it. In 2013, Canada officially stopped distributing the penny. The sky didn't fall. The economy didn't collapse into a pile of maple syrup.
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Basically, they just moved to a rounding system for cash transactions. If your total is $1.02, you pay a dollar. If it's $1.03, you pay $1.05. It’s simple. Most importantly, this only applies to cash. If you’re using a debit card or Apple Pay, you still pay the exact cent. This is a crucial distinction that most people miss when they worry about price gouging.
In Canada, the "Penny-to-Nickel" transition was surprisingly smooth. The Royal Canadian Mint estimated it saves taxpayers about $11 million CAD annually. They even had a "Retire the Penny" campaign where citizens donated their jars of coins to charities like Free the Children. It turned a nuisance into a massive philanthropic wave.
The "Zinc Lobby" and Why Change is Hard
So, if it’s such a drain on the treasury, why are we still doing this?
Enter the lobbyist.
Americans for Common Cents (ACC) is a primary group that fights to keep the penny in circulation. While they argue that getting rid of the penny would hurt the poor by causing "rounding inflation," it’s worth noting that the group has historically been funded by Jarden Zinc Products—the very company that sells the zinc blanks to the U.S. Mint. It’s a classic case of special interest groups protecting a niche market.
They argue that rounding up would disproportionately affect low-income individuals who rely more on cash. However, multiple studies, including research by the Federal Reserve, suggest that rounding is a "wash." Sometimes you round up, sometimes you round down. Over a year of grocery trips, the net impact on your bank account is essentially zero.
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- The Charity Factor: Charities like Ronald McDonald House rely heavily on those little acrylic boxes by the register. They worry that if the penny disappears, people won't drop their "extra" change in the bucket.
- The Nostalgia Trap: Americans are weirdly sentimental. We like the image of Abraham Lincoln. We like the tradition. But we used to have a half-penny, too. We got rid of that in 1857 because its purchasing power had dropped too low. Adjusted for inflation, that half-penny was worth about 15 cents in today’s money.
We are currently holding onto a coin that is worth roughly 1/15th of what the "useless" half-penny was worth when we killed it.
The Hidden Environmental Cost
We rarely talk about the environmental impact of the penny. Mining zinc and copper is an energy-intensive process that involves massive open-pit mines. Then you have to transport that ore, smelt it, stamp it, and—this is the big one—ship it.
Pennies are heavy.
Armored trucks crisscross the country every day, burning diesel fuel to move billions of cents from the Mint to banks to retailers. A huge portion of these coins then immediately drop out of circulation. They go into jars. They go into landfills. They sit in sewers. Because they are so low-value, the "velocity" of the penny is abysmal. We have to keep minting billions of new ones every year just to replace the ones people are too lazy to carry. It's a logistical and ecological nightmare for a currency that nobody actually wants to use.
The Military Already Did It
If you want a preview of a penny-less America, look at U.S. overseas military bases. The Department of Defense stopped using pennies at AAFES (Army and Air Force Exchange Service) locations abroad back in the 1980s. Why? Because shipping crates of pennies to bases in Germany or Japan was too expensive and bulky.
They use a five-cent rounding system. Soldiers haven't revolted. The PX hasn't gone out of business. It’s a functional, decades-long case study proving that the U.S. infrastructure can handle a 5-cent minimum denomination without any drama.
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The Inflation Myth
One of the biggest fears is that retailers will use the end of the penny as an excuse to hike prices. "Everything will end in .99 and then get rounded up to a dollar!"
Actually, the opposite is often true in competitive markets. If you know the total will be rounded, retailers might price things at $1.02 to encourage a "round down" to a dollar as a psychological win for the customer. But again, this only matters for cash. Since cash transactions currently make up less than 20% of total payments in the U.S. (and that number is dropping), the "inflationary" impact of rounding is statistically insignificant.
Actionable Steps for the "Change" in Your Pocket
Regardless of when the government finally pulls the plug, the penny is already effectively dead in our daily lives. You can't use them in vending machines. You can't use them at most laundromats. You certainly can't use them at a toll booth.
Here is how you should handle the "penny problem" right now:
- Cash Them In Early: Don't wait for a formal phase-out. Machines like Coinstar take a cut (usually around 11-12%), but many banks will give you free paper rolls. If you have a massive jug, spend an hour rolling them while watching a movie. It’s found money.
- The No-Fee Hack: If you use a Coinstar machine, you can usually opt for an e-gift card (like Amazon or Starbucks) instead of cash to skip the percentage fee entirely.
- Donate to Micro-Charities: Since pennies are a burden to you but a resource in aggregate, look for local schools or "Penny Drive" fundraisers. They have the volunteer power to process the coins that you don't.
- Stop Saving Them: Honestly? Just stop. If you get pennies back in change, drop them in the "Take a penny, leave a penny" dish immediately. Keep your pockets light and your mental cycles focused on something more valuable than 1/100th of a buck.
Getting rid of the penny isn't just about saving the government $90 million. It's about admitting that the world has changed. Our currency should reflect the reality of 2026, not the economy of 1950. The penny served its purpose for over two centuries, but it’s time to let it retire gracefully. We have bigger fish to fry—like the fact that we’re still printing $1 bills instead of using $1 coins, but that’s a headache for another day.
For now, check your couch. You’ve probably got forty cents in "dead capital" hiding under the cushions.