You probably have a jar of them. Most people do. It sits on a dresser or in a kitchen junk drawer, gathering dust and turning that dull, oxidized brown color. We’re talking about the one-cent coin, a piece of copper-plated zinc that most of us treat as literal trash. Honestly, if you saw a penny on a dirty sidewalk, would you even bend over to pick it up? Probably not.
The conversation around the discontinuation of the penny isn't just about getting rid of a useless coin; it’s a massive logistical and economic headache that has been brewing for decades. We are currently in a weird spot where it costs the U.S. Mint way more to make the coin than the coin is actually worth. It’s a net loss for the taxpayer every single time the metal presses hit the blanks in Philadelphia and Denver.
But here we are. Still carrying them. Still losing them in couch cushions.
The Math Behind the Metal
Let’s get into the numbers because they are frankly ridiculous. According to the U.S. Mint’s 2023 Annual Report, the cost to produce and distribute a single penny was about 3.07 cents. Think about that for a second. We are spending over three cents to create one cent of "value." If any private business operated this way, they’d be bankrupt in a week.
The U.S. Mint produced billions of these things last year. When you multiply that 2-cent loss by billions of units, you’re looking at a deficit of nearly $90 million annually just on this one denomination.
Why is it so expensive? Zinc. The penny is 97.5% zinc and only 2.5% copper. Zinc is a commodity, and its price fluctuates based on global demand, mining strikes, and trade policies. While the Mint tries to optimize the manufacturing process, they can't control the global market for raw ore.
What Canada and Others Did
We aren't the first ones to face this. In fact, we’re kinda late to the party. Canada ditched their penny back in 2013. They realized it was costing them $11 million a year to keep it in circulation. When they killed it, the sky didn't fall. They moved to a rounding system. If your total is $1.01 or $1.02, it rounds down to $1.00. If it’s $1.03 or $1.04, it rounds up to $1.05. Simple.
Australia did it in 1992. New Zealand followed. Even the UK got rid of its half-penny decades ago. In all these cases, the transition was surprisingly smooth. People adjusted within weeks. The "rounding tax" that everyone feared turned out to be a wash because sometimes you win a couple of cents and sometimes you lose them.
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The Lobbyists Saving the Penny
If the math is so bad, why hasn't the discontinuation of the penny happened yet? Follow the money. Specifically, follow it to the zinc industry.
There is a group called Americans for Common Cents. It sounds like a grassroots organization of concerned citizens, but it’s largely funded by Jarden Zinc Products, the company that sells the zinc blanks to the U.S. Mint. They spend a lot of time and money on Capitol Hill convincing lawmakers that getting rid of the penny would hurt the poor. Their argument is that if we move to a 5-cent rounding system, businesses will just round everything up, essentially creating a "poverty tax."
It’s a powerful talking point. No politician wants to be the one who "raised prices" on the working class, even if it’s just by two cents at a time.
Robert Whaples, an economics professor at Wake Forest University, has studied this extensively. His research suggests that rounding is actually neutral. It doesn't systematically favor the retailer or the consumer. Yet, the fear of inflation—no matter how small—keeps the penny on life support.
Charities and the "Penny Drive"
Another major roadblock is the nonprofit sector. Have you ever seen those "Pennies for Patients" boxes? Small change adds up to massive amounts for organizations like the Leukemia & Lymphoma Society.
Charities argue that the penny is an "entry-level" way for people to give. It’s low friction. You don't miss a penny, so you drop it in the jar. If the penny disappears, do those donations migrate to nickels? Or do people just stop giving their spare change entirely?
There is a psychological barrier there. Dropping a nickel feels more like "giving money," whereas dropping a penny feels like "lightening your pocket." For a large-scale charity, losing that volume of micro-donations could mean losing millions in funding for research and support.
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The Inflation Argument
People often forget that the penny doesn't buy anything anymore. In the 1950s, a penny actually had purchasing power. You could get a piece of gum or a stamp. Today? You can't buy a single thing for one cent.
If we adjusted for inflation, the penny today has less purchasing power than the half-penny had when it was discontinued in 1857. Back then, the government saw that the half-penny was more trouble than it was worth and just stopped making it. We’ve reached that point with the penny, and we’re fast approaching it with the nickel too (which also costs more than five cents to make).
Practical Realities of a Post-Penny World
What would actually happen if the Treasury Department called it quits tomorrow?
First, cash transactions would round. Digital transactions—credit cards, Apple Pay, Venmo—would stay exactly the same. Since we are moving toward a cashless society anyway, the impact of the discontinuation of the penny shrinks every year. Most of us already live in a "rounded" world without realizing it.
The biggest hurdle isn't the rounding; it's the 400 billion pennies already in circulation. They wouldn't suddenly become illegal. You could still spend them, but the Mint would stop making new ones, and banks would eventually ship them back to be melted down.
It would take a decade or more for them to truly vanish from the ecosystem.
Misconceptions About Sales Tax
A common myth is that sales tax would make rounding impossible. That's not how it works. The rounding happens at the very end of the transaction, on the final total, not on each individual item. If your milk is $3.99 and tax brings it to $4.21, you pay $4.20 in cash. If the total is $4.23, you pay $4.25.
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It’s math. It’s not a conspiracy.
The Path Forward
So, what should you do? If you’re sitting on a hoard of copper and zinc, you’re essentially holding onto a dead asset.
Stop hoarding. Take your jars to a Coinstar or your local credit union. Many banks have coin-counting machines that are free for members. Getting that metal back into the system reduces the need for the Mint to strike new coins, which saves everyone money.
Watch the legislation. Keep an eye on the "Currency Optimization, Innovation, and National Savings (COINS) Act." It pops up every few years in Congress. It usually proposes not just the discontinuation of the penny, but also a shift from the $1 paper bill to a $1 coin, which lasts much longer and saves billions in the long run.
Embrace digital. The easiest way to avoid the penny debate is to stop using cash for small transactions. When you pay digitally, you pay the exact amount down to the cent, and no one has to worry about the logistics of mining zinc in Tennessee just so you can get four cents back in change.
The penny had a good run. It’s been the backbone of American commerce since 1793. But at some point, sentimentality has to give way to common sense. We are literally burning money to make money that nobody wants. It’s time to let the penny retire.
Immediate Steps to Take:
- Audit your change: Empty your jars now. If the penny is discontinued, the "melt value" is technically higher than the face value, but it is currently illegal to melt down U.S. coins for their raw metal. Spend them or deposit them while they are still standard tender.
- Support rounding initiatives: If you frequent local businesses, don't be afraid to tell them you’d support a "round to the nearest nickel" policy for cash. Some small shops already do this informally to speed up their lines.
- Educate others on the "Zinc Lobby": Understanding that the penny's existence is partially due to corporate lobbying helps frame the debate as an economic issue rather than a cultural one.
The reality is that the penny's days are numbered. Whether it happens this year or in five years, the fiscal pressure of the discontinuation of the penny will eventually outweigh the political inertia keeping it in our pockets.