Pinching Pennies

From 1793 through 1857 the U.S. mint produced a coin called a half cent.  It was the smallest denomination of coin ever available in U.S. history.  Eventually, after 64 years of production, the half cent was discontinued due to a lack of utility, popularity, and usefulness.  At the time that the half cent was declared useless it had the equivalent 2010 purchasing power of 13 cents.       

The 1 cent coin has now reigned as the smallest denomination of coin for 154 years; well over twice the time of the half cent.  Today it carries virtually no purchasing power and amounts to a loss of time in counting coins.  Economists speculate that we lose millions of dollars per year in wasted efficiency by carrying and counting pennies.  As if this weren’t enough, the cost to create a 1 cent coin is now around 1.79 cents based on the U.S. Mint 2010 report, resulting in a clear 79% loss of taxpayer funds.  An even greater capital loss occurs in production of the nickel, which costs 9.2 cents to make, for a hit of 84%.  All other coins are minted profitably.

Numerous attempts have been made to end the minting of the penny.  In fact, bills were brought to the legislature in 2001 and again in 2006.  Neither bill prevailed.  The major arguments to keep pennies amounted mostly to issues of tradition and sentiment, while the mathematical argument is a no-brainer.  Of course we can’t ignore the fact that a major argument in support of the penny is voiced by the zinc lobby fighting tooth and nail to secure their place in the market.

If economy were the basis of decision we would have good cause to eliminate the penny, the nickel, and the quarter; leaving the dime, half dollar, and dollar coins as the remaining currencies.  Transactions would then be rounded to the nearest dime, making them considerably more precise in terms of purchase power than they were in 1857.  In this case most retailers will be forced to round down.  Since most prices end in $.99 to create a lower price image, retailers would be more apt to use $.90 wherever possible, instead of the weightier $1.00.

This rant isn’t just about pennies.  It’s about the fact that we excuse waste in the most inexcusable ways.  We spend millions of dollars creating little round metal objects that we don’t need.  We carry them around, sort them, exchange them, and count them, knowing all the time that they don’t really amount to much.  So we throw them in a jar.  We have always done it that way.  We have also always burned a thousand gallons of gasoline per household per year.  We have always wasted thousands of gallons of water on lawns.  We have always burned millions of BTU’s of energy in unoccupied rooms.  We have always thrown away a horrendous percentage of recyclables.  

In early July, our law makers in Washington argued over the Better Use ofLight Bulbs act, a bill intended to prevent higher efficiency standards in light bulbs.  Republicans introduced the act saying that energy efficiency standards limit consumer choices.  Rush Limbaugh supported the bill saying “Let there be freedom!”  After all, haven’t we always used inefficient light bulbs?  Fortunately, the BULB bill failed and the efficiency standards that were signed into law by George Bush will still remain in place mandating more efficient light bulbs and several other energy saving initiatives.

One perplexing side effect of the Great Recession is that America has been forced to become leaner in order to adapt and survive.  We have spent the last three years seeking out and removing sources of waste.  Consequently, as the economy makes a slow recovery U.S. employment has not rebounded despite increasing corporate profits.  Businesses are now doing more work with less manpower and less space.  The penny pinchers are the survivors.  So perhaps you could start cutting waste by emptying your jar full of pennies and nickels.  Use that money to buy better light bulbs!