We’ve all seen the stories predicting the demise of the one-cent coin. Just recently, it was reported that producing the penny cost the U.S. Mint $69 million in 2017. Chief among the list of complaints is it costs the government more to make a penny than it’s worth, and pennies aren’t used that much anymore. We asked PNC’s Karen Morgan, vice president of cash services, about the not-so-clear fate of the poor, pitiful penny.
PNC Point of View: How much does it cost to produce the penny?
Karen Morgan: The one-cent coin is comprised of 2.5% copper and the rest is zinc. The price of copper has increased fourfold in the last 15 years, in part due to an increase in demand for the material used for electrical wiring in cars and other technology products. And the price of zinc has increased threefold in the same timeframe, which means the penny costs the U.S. 1.8 cents to produce.
POV: Why don’t people melt the penny and sell it for its material?
KM: It is illegal. Destroying U.S. currency of any kind is considered “defacing government property.” In 2007, The U.S. Mint slapped a steep price tag on melting coins: violators can now be punished with up to a $10,000 fine and five years in prison.
POV: How would things change if we got rid of the penny?
KM: Likely the biggest change consumers would notice is prices rounded up to 5 cent intervals. Some organizations have already moved to banish the penny on a small scale. For example, the U.S. Army and U.S. Air Force already have prohibited use of the penny in its exchange stores overseas because they are too burdensome and expensive to transport.
POV: Why does the government continue to produce something that loses money?
KM: Pennies are expensive to produce, but bills, quarters and dimes are still cheaper to produce than they’re worth, which combined with the other commemorative items the Mint sells, makes up for the loss. That said, the federal government occasionally asks people to turn in their penny collections and piggy bank stashes to save the country money.
POV: What is the fate of the penny?
KM: It’s not likely the penny will go away any time soon. That’s mostly because it would require an Act of Congress to get rid of any denomination of currency, and there’s not much pressure on current leaders to do so. Like it or not, at least for now, our copper companion is safe.
Have spare pennies? Roll them up and deposit them at your nearest branch »
Did you know the nickel is also more expensive to produce than it’s worth? The 5 cent coin costs a total of 7 cents to produce and distribute.
PNC Point of View
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1. 2017 Annual Report, U.S. Mint, 2018
2. Lincoln Penny (One-Cent Coin), U.S. Mint, April 2017
3. Release: United States Mint Limits Exportation & Melting of Coins, U.S. Mint, 2007
5. Notice to Assignment Editors: June Is Penny Redemption Month, U.S. Mint, June 1974
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