Is It Time To Stop Making the Penny? DOGE, And Some Economists, Are Wondering | Global News Avenue

Contemplating the fate of the penny isn’t worth your time — and that’s exactly the point, economists say it’s time to phase out the penny.

These economists — and others who have had enough of the coin — have argued for years that Americans were justified in ignoring it. They say spending a minute digging a penny out of a jar is a bad investment, considering the average American hourly wage is about a penny a second.

The long-running debate over whether penny production should end is getting some new attention this week. — although there is no clear recommendation to end the issue. .

Robert Whaples, an economics professor at Wake Forest University who has been studying the issue for about two decades, said the daily use and use of pennies has increased due to inflation and the rise of bank cards and digital wallets. Support dwindled and the topic was revived. .

“In any of those years, I would give the probability that the Mint would stop producing 1-penny coins a 5 percent chance, or probably less than a 5 percent chance,” Whaples said. “We have left that area.”

After COVID-19, ‘no one cares about pennies’

Jay Zagorsky, a professor at Boston University’s Questrom School of Business, believes the availability of cash, including coins needed to make change, is critical, especially for those who have difficulty affording bank fees or meeting Minimum account balance required for anyone. Before the coin shortage during COVID-19, he viewed pennies as an important part of the cash ecosystem.

“Inflation hits 10% in a year, and everyone needs a quarter,” Zagorski said. “Nobody cares about a penny, that’s pretty much a given for me.”

DOGE estimates that the Mint loses more than $100 million annually on pennies, and each penny costs about 3.7 cents to produce, according to the Mint’s annual report. The new unit is led by Tesla CEO Elon Musk, who worth a lot of money— Ask for feedback on the numbers by posting on X: “Penny (or 3 cents!) express your thoughts.”

Many users responded that every penny was a waste and a symbol of government inefficiency. Others worry that without a penny, they’ll spend more because prices ending in 99 cents will go up.

Waples said when Canada phased out the penny, the price was still set at one cent. But for customers paying with cash, merchants began rounding to the nearest five cents. Consumers can expect to see a similar approach here, he said.

According to the Federal Reserve, about 16% of transactions are conducted in cash. Whaples, who used data from convenience store chains to study the issue, said cash bills are rounded up or down once taxes are taken into account.

Economists say much of the support for the penny stems from nostalgia or the belief that it is a culturally important artifact. (Some people even consider these coins to be “lucky.”)

If logic prevails, another coin could be in DOGE’s crosshairs: the nickel costs about 13.8 cents to make, according to the Mint.

“For a penny, this could be a first step,” said Andrew Cairsley, a professor at Weber State University’s Goddard School of Business and Economics.