The Penny
Earlier today came the announcement that the production of the penny may be ended. Some details are in this PBS report.
It’s no news that it costs more to make a penny, than the penny is worth. I don’t know about you, but if I see a penny on the ground, I don’t expend a lot of effort to pick it up – not so if it’s a dime down there, or something else (once I found three $100 bills and miscellany fluttering on a street. A lady had left her billfold on the top of her car and forgot it there – I took the billfold and the bills to the police….)
Ten years ago I found three forlorn pennies along a road on the Big Island of Hawaii, and for some strange reason, have kept them until now. Here they are. Their one moment of fame:
It is likely very premature to issue a death certificate for the penny. It may be lowly, and inefficient, and a nuisance, but it is popular.
In a recent post I said I paid $2.81 for my daily coffee. If I paid cash (I don’t) I’d have to come up with the penny. Sometimes there is a penny dish at the cash register in some stores. But a penny is a penny, and it adds up even in a wealthy society as ours is.
Someone on TV was musing further today: maybe they shouldn’t stop with pennies, and include nickels, and maybe dimes in the destined for extinction….
It isn’t quite so simple: So they eliminate the pennies and theoretically save millions of dollars a year – dollars presumably spent on wages and similar somewhere in the national food chain.
But I think more of the point of use of the lowly penny.
Let’s say the penny disappears. My coffee will have to be $2.80, or $2.85 – you’d have to round up or round down. Can you imagine anyone rounding down?
In an earlier post I noticed how much that one cup of coffee realizes in multiples over time. One cent less or four cents more makes a difference.
I could do the same exercise getting rid of the nickel, or the dime. There is money to be made – lots of it – by someone, if only in tiny increments.
Let’s leave it at that for now.
POSTNOTE: As noted, nothing is ever so simple as it appears. Even my example has holes. For instance, my $2.81 is paid by credit card, so I don’t have to rummage around in my pocket for a random penny. or vex the counter person having to come up with 19 cents change for the extra dollar I had found to pay for my coffee. Of course, it quietly costs money for me to pay by credit. The expense to the company has to be paid by somebody – me; the cost for the convenience also has to be paid – me. Then there’s those who make money from the credit transaction – on and on.
The bottom line remains: there is alot money to be made from getting rid of the penny, and it will not go to the people whose job it has been to produce the coin, or the consumers who will unknowingly pay more for their purchase one way or another.
Below is the graphic I used in the earlier blog about Wealth. And here’s the post itself. Caveat emptor.
COMMENT; see end of post
Canada dumped the penny some time ago and maybe even the nickel. The way it works up there is your cash purchase price is rounded either up or down according to rounding rules. So, in Dick’s case, a $2.81 cent cup of coffee would be rounded down to $2.80. If it were $2.87, it would round up to $2.90. I believe that $2.85 would also round up to $2.90. However, that only applies to cash transactions. Credit card payments are charged the exact amount.
I volunteer for an organization that operates a small gift shop. Cash is a pain to deal with. We have to count it each day, keep it secure, and schlep it to the bank. And then, the bank charges us a fee to deposit the cash. We do have to pay a 3.5% credit card fee on charged transactions, but we’ll readily pay that to avoid the hassle of cash.
More and more merchants are passing along the credit card fee to the customer. Key’s restaurants are an example. And, some merchants only take cards, no cash accepted.