A penniless America needs change to change | Sheldon H. Jacobson

The cost of producing a cent coin was 3.69 cents last year, which includes materials (mostly zinc), administration and distribution. The U.S. produced 3.2 billion pennies in 2024, placing $31.7 million of monetary value into circulation at a cost of $117 million. So adding more penny coins to circulation provides a negative return on investment.

Many other countries have already eliminated the penny coin or its equivalent. Canada did in 2012. It also eliminated dollar and two dollar banknotes in favor of coins in 1989 and 1996, respectively, now affectionately known as loonies and toonies. Such a change is not something our nation appears ready for anytime soon.

The Treasury has eliminated coin denominations before. In 1792, the U.S. had 10 denominations of coins (half-cent, one cent, half-dime, dime, quarter, half-dollar, dollar, quarter-eagle ($2.50), half-eagle ($5) and eagle ($10). In 1857, production of the half-cent coin stopped, given limited buying power. Other coin denominations (two cent, three cent, 20 cent, and $3) came and went between 1851 and 1889.

With about 86% of financial transactions now done electronically, a percentage that's growing, pennies have become akin to noise in many cash transactions. Given that a cent in 1857 has the equivalent buying power of 37 cents today, the value of a penny has become negligible.

The loudest and perhaps most worthy argument in favor of keeping the penny is that those with the lowest income almost exclusively rely on cash. So they would be negatively impacted with the elimination of pennies.

But stopping the production of pennies does not mean they will instantaneously cease to exist. In Canada, pennies remain legal tender and can be exchanged at any financial institution. Moreover, the nickel has effectively replaced their smallest unit of coin circulation, with rounding up or down used to determine cash prices.

Yet why stop with pennies? The cost of producing nickels was 13.8 cents last year. For cost savings, eliminating nickels should be considered, leaving the 10-cent dime as the smallest coin produced. This would be equivalent to moving the decimal place over by one space in cash transactions, making a dime the de facto new penny.

Consumers would bear a small cost, estimated by the Federal Reserve to be $6 million annually for pennies and $56 million annually for nickels, mostly due to skewed price rounding. No longer producing pennies and nickels also would yield savings to the U.S. Mint far above $100 million annually, a positive return on investment.

Given that the U.S. population is over 340 million, the resulting consumer costs translate into two cents and 17 cents per person annually, respectively.

Though the savings in not producing pennies and nickels may be the strongest argument, the best reason is more fundamental: Changes in buying power have historically dictated coin changes and needs, and should continue to do so. Unfortunately, our nation has a disappointing record of being slow to adapt to changes that the rest of the world embraced for betterment.

For example, the U.S. made an effort to switch to the metric system in 1976, which the majority of the world uses. Adopting such standardization provides economic advantages, particularly in products distributed through global trade. Good faith efforts were made, including the creation of the U.S. Metric Board to support the conversion. The effort failed, with metric measures generally not well received and eventually falling by the wayside.

Change is hard. Leaving the status quo alone is easy. But just because something is easy does not mean it is ideal. The time to sunset both pennies and nickels has arrived. Much like coins eliminated in the past, leave them to numismatists to enjoy in their collections.