Mr. President, a penny for your thoughts? The American people recently learned that the US government could soon be laying to rest the good old one-cent coin. President Donald Trump posted on Truth Social that he wants to stop producing the penny, calling it "wasteful." His remarks came soon after the Department of Government Efficiency (DOGE) highlighted the enormous costs of manufacturing the low-value coin. Is it time to say goodbye to Honest Abe’s profile?
The War on the Penny
“For far too long the United States has minted pennies which literally cost us more than 2 cents,” the president said in a Feb. 9 post on the social media platform. “This is so wasteful! I have instructed my Secretary of the U.S. Treasury to stop producing new pennies. Let’s rip the waste out of our great nation’s budget, even if it’s a penny at a time.”
President Trump does have a point. The US Mint's annual report revealed that the federal government spent 3.7 cents in fiscal year 2024 to produce a one-cent coin. This also represented the 19th straight year that production costs outpaced the cent's face value. With the creation of more than three billion pennies last year, taxpayers are spending approximately $119 million to make coins that buy very little.
One cause of the enormous production costs is the rise in zinc and copper prices. The penny is mainly made of zinc with copper plating. Over the last decade, these industrial metals have rocketed in price: Zinc has climbed 92%, and copper has surged 68%.
The other factor is the debasement of America's currency. Back in the day, a penny could buy consumers a steak and kidney pie, a cup of coffee, a slice of cheesecake, and a newsreel, with enough change left over to ride a trolley. (Yes, this is an embellishment.) Today, a penny is worth virtually nothing as the Federal Reserve has eroded 99% of the public's purchasing power since its inception more than a century ago.
A chief challenge for the United States would be its replacement. The next coin up the ladder is the nickel. The US Mint reports that it costs nearly 14 cents to craft a five-cent nickel: 11 cents for production expenses and 2.8 cents for administrative and distribution costs. In order to remove the penny, the federal government would need to expand the volume of nickels traversing the marketplace to offset the penny's eradication, which could come with a higher price tag.
The National Association of Convenience Stores reported in a survey that 36% of consumers supported eliminating the penny. Six years ago, a survey by Americans for Common Cents found that 68% favored leaving the penny alone. The experts, meanwhile, are split on the issue.
“Gone are the days of penny candy or even buying a gum ball for a penny," Sean Snaith, an economist and director of the Institute of Economic Competitiveness at the University of Central Florida, told the Associated Press. "I think at some point in history cancelling the penny would have been a bigger deal, but now people don't even carry them in their pockets. They're largely not in circulation." Mark Weller, director of Americans for Common Cents, told the newswire that it is a poor decision for consumers and the broader economy because it would impact low-income households and the unbanked and underbanked. "Cash is cheapest for consumers," he said.
The World Is in a Cent
Since the 1980s, nations worldwide have abolished the penny for various reasons.
In 1989, for example, New Zealand halted minting pennies because production costs were more than the coin's value. Of course, the most notable country to phase out the penny is Canada. In 2012, the Great White North started removing the cent from circulation and requested businesses to round their prices to the nearest nickel for cash transactions. While the penny is still accepted among merchants, it isn't easy to find these exchanges.
That said, Australia, Brazil, Finland, Israel, Norway, Sweden, Switzerland, and The Netherlands have also ditched low-value coins.
Nostalgia
Today’s generation of consumers may not have much affinity for the penny since they have relied on high-denomination banknotes, plastic cards, and mobile applications to conduct their day-to-day business. For others, the penny might satisfy a nostalgic appetite. Just think: There was a half-penny coin 100 years ago in the days of sound money. This is truly a “penny for your thoughts” experiment.
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