Today, there are 114 billion pennies believed to be in circulation. That's $1.4 billion.
There is little debate about whether pennies should remain in circulation. Most economists say they are a waste, given it costs three cents to produce a one-cent penny.
It's an economic burden, says David Gulley, an economics professor at Bentley University. “Because millions vanish under couch cushions each year, the U.S. Mint must produce a steady stream of replacements."
But Americans have an intangible attraction to the penny, perhaps recalling a much simpler time, a different era where "penny candy" and penny gumball machines were staples of American life. A penny could actually buy something then.
It's also problematic that getting rid of the penny would force businesses to round the price of their products up to the nearest five cents. No more $7.99 specials on fast-food meals.
“Businesses might round up more often than down, leading to a slight inflationary effect,” said David Smith, an economics professor at Pepperdine University.
In Canada, which eliminated the penny in 2013, cash transactions were rounded to the nearest five cents, based on the total amount of the transaction, not on each individual item.
To the extent rounding up occurs more frequently than rounding down, cash consumers would be paying the price for the cost efficiency Trump and Musk are seeking, said Ajay Patel, a professor of finance at Wake Forest University School of Business.
Canada’s experience in eliminating the penny shows there are some additional costs for consumers to bear. A 2017 paper by Canadian economist Christina Cheung found that penny-rounding in grocery transactions imposed a “rounding tax” of approximately $3.27 million, from Canadian consumers to grocery vendors. For a typical grocery store, though, this amounted to an estimated additional revenue of $157, indicating a minimal impact on individual consumers.
Grocery stores, with their historically small margins sometimes measured in pennies, would be most impacted by taking the penny out of circulation. But if the Canadian experience is any indication, the actual cost of the switch will be negligible.
It will take a long time for the penny to disappear from America's cash registers. Perhaps it never will. As pennies become rarer, they will increase in value and that's when people will start hoarding them.
As a symbol of Americana, the penny will endure.
But if this is the beginning of the end for the penny, let us fondly, if fleetingly, salute the less-than-majestic but nevertheless swell part it has played in the country’s life. A penny could never buy you much, but it could buy you something: It was no coincidence that drugstores placed penny-a-crank gum-ball machines near their front doors, knowing that the colorful sight would extract the departing customers’ last cents. Penny arcades promised pleasure on a budget. The penny loafer, with the slits on each shoe for the coin, went from utilitarian to sublime because of it.
The penny was a synonym for value, shorthand for what-can-you-lose sales pitches: the sound of “one red cent” from the mouths of carnival barkers lured you to the tent, even as you sensed you were about to fork over more than that. Merchandisers set their price points at $5.99 or $24.99 because they knew the missing final penny would do the heavy lifting for them by making the item feel less expensive than it was.
Not too many Americans will shed a tear for the penny. In college, I remember collecting pennies from my dresser drawers, my kitchen, sofa cushions, and the armchair in my living room, hoping it added up to $2.12 to buy a six-pack of Coke. If I was a few cents short, the cute little girl running the register at White Hen Pantry would let it slide.
That America is gone. And so is, for all practical purposes, the penny.
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