Time to retire the penny

P

Michael Smerconish,, every bit as much of a curmudgeon as Rico, has an column in The Philadelphia Inquirer about a coin that irritates him:

Approaching noon, I had a hankering for shrimp tempura sushi and some dumplings. At a local takeout, my bill came to $15.01. After I handed the man a twenty, he began counting out 99 cents to hand me along with four dollar bills. While there was a tip jar, there was not the penny container to which we've grown accustomed at checkout. I protested the prospect of putting all that change in my pocket. The cashier told me he was only following policy. Luckily, a female stranger behind me handed me a penny.
I walked away with sushi and dumplings in one hand, and a five dollar bill in the other, now ready to climb aboard the campaign to "retire" the penny. Soon thereafter, I shared my experience with the "campaign manager," Massachusetts Institute of Technology physics professor Jeff Gore, who would like to see Congress phase out this coin.
"The penny is not useful," Gore told me. "It no longer allows you to purchase anything, yet it slows down these cash transactions, and it's just painful for me when I buy something, 95 cents plus tax, that's $1.01 or $1.02. I think I'm going to get all this change back, it's slowing down the line, and this is what originally motivated me to start thinking about why we should be retiring the penny."
Last I checked, there had been nearly two hundred thousand visits to Gore's website, www.retirethepenny.org, where he has assembled information about his quest to make the penny go the way of the halfpenny. According to Gore, for the last eight years the Mint has been losing money by making pennies. He said it actually costs nearly two cents to make the one cent that few wish to use in transactions. Lack of convenience is another consideration.
"There was a study done by Walgreen's and the National Association of Convenience Stores, where they found that roughly two seconds are wasted in every cash transaction just as a result of handling pennies," Gore said. "In principle, you think: 'Oh pennies should be fast', but, at some rate, we're all searching for the pennies in our pocket because we don't want to end up getting 99 cents back in change. It adds up. Each of us is wasting an hour or two every year handling pennies, and if you put any reasonable value to your time, then this comes out to being something like two billion dollars per year that the economy wastes just handling these pennies."
If Gore gets his way, my lunch bill would have been rounded to the nearest five-cent increment. The sushi and dumplings that totaled $15.01 would have cost $15. A bill for $15.03 would round up to $15.05. If sales tax applies, the rounding would take place after it has been added.
Those pennies that many of us have at home in piggy banks or buckets would still be legal tender, but they would largely fall out of circulation, and the Mint would stop making them. Canada has already retired its penny. Cash transactions are rounded to the nearest five cents, while electronic transactions are still to the nearest cent.
Of course, not everyone agrees. The idea of retiring the penny makes no sense to the self-described Americans for Common Cents (www.pennies.org), which notes that polls show more than two-thirds of Americans want to keep the coin. This group argues that "eliminating the penny would increase spending for many Federal government programs, causing inflationary pressures, and it wouldn't save money. The Mint has said that, without the penny, fixed costs associated with penny production would have to be absorbed by the remaining denominations of circulating coins."
Gore told me that the zinc industry now constitutes a pro-penny lobby because, while the coin looks as if it's copper (and it used to be copper), it's really mostly zinc with a copper coating.
I raised another concern: when I buy my Inquirer and coffee at Wawa, whatever change might come my way I usually donate in the container that's next to the register, even though for all the times I have done so, I still can't name the charity. Might they suffer?
"There are charities that raise money by collecting pennies, such as the one that you're referring to," Gore said, "although I think that, in general, such charities can move toward collecting nickels instead of pennies, and it's not obvious to me they're going to get fewer than one-fifth as many nickels than they currently get pennies because, frankly, the pennies just don't add up to a whole lot."
Another professor, Robert Whaples from Wake Forest, disputes any criticism that Americans would be burdened by a rounding tax. A decade ago, Whaples looked at a week's worth of transactions (nearly two hundred thousand) from twenty locations of gas stations and convenience stores in seven states. He analyzed cash transactions and rounded prices to the nearest nickel, with taxes included. According to Whaples, customers did not lose out. The impact of rounding was a break even. He also compared transactions in wealthy and poor areas and found the rounding-off would have no effect based on socioeconomic status. "Eliminating the penny will have a negligible impact on inflation and on convenience-store costs and profits, but it will save time for customers and clerks, which may be worth about $730 million per year," he wrote.
A few days after my initial encounter, I was again hungry for sushi. I returned to the same vendor and ordered more shrimp tempura sushi, with a side of edamame. Once again, my bill came to $15.01. Uh, oh. I handed the man, a different one than before, $20. He returned a $5 bill. I asked that it be exchanged for five singles, and he complied. I left one of them in a tip jar and walked away.

Rico says it's long been an irrelevant coin, and should go away. (And surely there's a better use for zinc than the penny...)