Take a penny, leave a penny

By MIKE MILIARD  |  October 13, 2006

Years ago, Americans for Common Cents backed a study by Penn State economics professor Raymond Lombra, who examined small transactions in convenience stores and found that “they’re going to be rounded up 60 to 93 percent of the time,” leading a “conservative estimate” of an extra $600 million levy on American consumers every year. Kolbe, of course, disputes this, asserting that his specified rounding scheme “favors neither the consumer nor the retailer because the probability of rounding up or down is 50 percent either way — it would come out even in the end.”

Weller doesn’t buy Kolbe’s government-waste argument either, pointing out that the nickel costs more to produce than its face value too. “On metal cost alone, there’s seven cents taken out to produce every nickel,” he says. “The mint’s gonna lose twice the amount this year on the nickel than they are on the penny, but nobody’s out there saying ‘let’s do away with the penny and the nickel.’ You’re losing money on the nickel, [but] you’ll be making more nickels? That’s not a cost saver, that’s a cost loser.”

And don’t get him started on the idea that elimination of the penny would save time at the cash register and be good for worker productivity. “That’s just an illusion,” he says. “In reality, our view is, the net time that it takes to make a transaction is going to increase under rounding rather than decrease. You’ll have to train employees, you’ll have to implement a rounding scheme on whether it’s rounded up or down for each transaction. Certainly, anyone who’s stood in line behind anyone who’s using a charge card or debit card would tell you that those transactions take even longer than it takes to make change.”

This is one point with which Jeff Gore, who studied economics as an undergrad at MIT, heartily disagrees. Check retirethepenny.org for a detailed numeric breakdown as to why. But in the interest of brevity, here’s a small piece of anecdotal evidence. “We all know that we spend time fishing through our pocket for pennies,” Gore says. “I went to a pizza restaurant not long ago. The bill came to $12.38, or something like that. I gave them a $20. The woman behind the register looked at the woman next to her, and she said she used [her pennies] all up last night, and another woman said she had lots of pennies in her car. To me, this was a perfect moment for us anti-penny advocates. I don’t care about the penny! I just want to go get my pizza!”

When I mention to Weller a country like Australia, which withdrew its one-cent and two-cent coins from circulation in 1991 (they remain legal tender) and doesn’t seem to have suffered any noticeable ill-effects, he concedes that “we haven’t looked at that. But we’re not New Zealand or some Latin American country that just devalues their currency. We’re the largest, most visible economy in the world. So what we do has a significant impact not just on our country, but on how we’re viewed in the world.”

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