8th grade ODW Benchmark 25-26

from “Why Doesn’t the United States (Finally) Get Rid of the Penny?”

by Binyamin Appelbaum

1. Canada stopped making pennies in 2012, and with good reason. Coining pennies is a money-losing proposition, and people don’t really need them anymore.

2. The same is true in the United States. Printing paper currency is hugely profitable for the federal government: The $100 bill is one of the nation’s most valuable exports. Quarters and dimes are moneymakers too. But it costs $1.43 to produce 100 pennies. Last year, making pennies cost taxpayers almost $39 million.

3. And for what? The federal government makes and distributes coins to facilitate commerce, but not much can be bought for less than five cents. Thanks to the magic of inflation, what cost a penny in 1950 requires a dime today.

4. Average American workers earned nearly a penny a second in 2015. It’s literally not worth their time to bend down and pluck one from the sidewalk.

5. In effect, eliminating the penny means all retail prices would end in zero or five. Some prices would rise a few pennies; some would be rounded down. Prices that end in 99 cents are common, and penny proponents have argued that eliminating pennies would amount to a one-cent sales tax. But Robert Whaples, an economist at Wake Forest University, actually examined this claim in 2007 by looking at pricing data from a chain of convenience stores. He reported that the savings from prices rounded down would roughly offset the cost of prices rounded up.

6. Indeed, consumers might actually benefit. Retailers like prices that end in “.99” because people tend to underestimate the actual price. When people see “$4.99,” they tend to pay too much attention to the 4 and not enough to the 99.

7. Yet Americans like the shiny copper (though not much copper) coins. In a 2014 poll, 71 percent of respondents said they do pick up pennies. And 43 percent said they would be “disappointed” or “angry” if the government stopped making them.

from “Taxpayers Lost $105 Million on Pennies and Nickels Last Year”

by Christopher Ingraham

1. In 2013, the cost of making pennies and nickels exceeded their face value for the eighth year in a row. The cost of minting a penny stood at 1.8 cents, nearly twice its face value. Nickels cost twice as much as dimes—9.4 cents vs. 4.6 cents—despite being worth only half as much.

2 . . . The U.S. Treasury spends nearly two dollars for every dollar of nickels and pennies it pumps into the economy. In contrast, the same amount of quarters and dimes costs the government less than 50 cents. A dollar bill is even cheaper, coming in at less than a quarter.

3. Historically, nickels and pennies have always been more expensive on a per-dollar basis than dimes and quarters—this makes sense, since it takes a lot more metal to make 100 pennies than it does to make four quarters. But the government only began losing money on nickels and pennies in 2006.

4 . . . Minting costs are primarily driven by the costs of the metals used to produce the coins— copper and nickel for the nickel, and copper and zinc for the penny. As those costs rose in the first half of the 21st century, the U.S. Mint began losing money on pennies and nickels.

5. All told, the Mint (and ultimately, U.S. taxpayers) lost $105 million on the production of pennies and nickels last year. . . .

6. The least controversial approach would be to simply change the metal composition of the coins to make them less expensive. Canadian nickels, for example, are 95% steel, which makes them cheaper to produce than their American cousins. As of last year, Canadian nickels still cost less than their face value.

7. The other option would be to discontinue pennies and nickels entirely—Canada ditched its pennies when their production cost approached 1.6 cents, well below what U.S. pennies cost now.

8. To be fair, the penny has plenty of supporters in the general public. A 2012 survey by penny lobbying firm ‘Americans for Common Cents’—funded, not surprisingly, by the zinc industry— found that 2/3rds of Americans favored keeping the penny. While any poll conducted by a lobbying outfit should be treated with skepticism, it’s probably safe to say that the penny and nickel hold special places in many Americans’ hearts—see, for starters, the remarkable number of penny-centric phrases and idioms in English.

from “Penny”

by the U.S. Mint History

1. The image on the first penny was of a lady with flowing hair symbolizing liberty. The coin was larger and made of pure copper, while today’s smaller coin is made of copper and zinc. It was one of the first coins made by the United States Mint after it was created in 1792.

2. In 1857, Congress authorized the United States Mint to strike the penny with 88% copper and 12% nickel. The new coins featured a flying eagle on the obverse and a wreath on the reverse. The “Indian Head” design appeared from 1859–1909.

3. From 1909 to 1958, the Lincoln “wheat” penny obverse was paired with a reverse that featured two sheaves of wheat flanking the inscriptions ONE CENT and UNITED STATES OF AMERICA. From 1959 to 2008, the reverse featured an image of the Lincoln Memorial designed by Frank Gasparro commemorating the 150th anniversary of Lincoln’s birth.

4. In 2009, the United States Mint issued four different pennies throughout the year in recognition of the bicentennial of Lincoln’s birth and centennial of the first year of the Lincoln cent.