Meanwhile, even in a world where Kolbe’s rounding schemes have yet to become the law of the land, some are taking it upon themselves to implement them. “My local Dunkin Donuts sets his prices so that after tax the sum rounds to the nearest nickel,” confesses a poster on Mankiw’s blog. “That way his cashiers seldom have to deal with pennies. I foul them up by asking for a senior discount.”
Who will get screwed?
Jeff Gore is right; the pro-penny lobby is indeed funded in large part by the zinc industry. Mark Weller, executive director of Americans for Common Cents — something about this issue seems to bring out the punster in everyone — has no trouble coming clean with this fact. ACC also gets support from numismatic and coin-collecting groups, he says.
Weller is sick of the glib, jokey way the penny-elimination campaign is treated in the media. “For years, we’ve had the TV news reporters who put the penny on the street [to see who’ll pick it up], or try to buy pizza with 400 pennies,” he says. “That gets a little bit tiresome. The interesting story here is that you’ve got a member of Congress who happens to be from a state with significant copper interests, who wants to do away with the penny and the dollar bill to benefit his home state. This isn’t just a guy who thinks this is a great thing for the country from a policy perspective. His motives are suspect.”
But might this be an instance of the penny calling the kettle copper, or something like that? Weller, asked to defend the penny, does readily admit his zinc-industry affiliations — but his arguments are couched in concern about consumers. “We’re agnostic on the whole question of what the penny should be made out of; whether it’s steel, aluminum, copper, zinc, or whatever,” he says. “But we feel that the consumers benefit if you have a low-denomination coin; they benefit from more accurate pricing, and the whole idea of rounding to the nickel is a real loser for consumers.”
And not just consumers: lower-income consumers. “You’re seeing more and more use of debit cards and things of that nature,” Weller says. “Who would have thought, five or ten years ago, that you’d go to a McDonalds or Taco Bell and use plastic for a five- or six-dollar transaction?” But many poorer people don’t use debit and credit cards and are dependent on cash transactions. The penniless marketplace Jim Kolbe proposes, Weller says, would amount to a “rounding tax on the consumer.”
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!”