What Trump’s Plan to Stop Minting Pennies Means for Consumers

The need for a penny has long been questioned, but some fear getting rid of it could push up prices

By Oyin Adedoyin and Dalvin Brown of The WSJ. When I taught, this came up in the book The Economics of Macro Issues.

Excerpts:

"It cost 3.7 cents to make one in 2024. That is up from 3.07 cents in 2023, 2.7 cents in 2022 and 2.1 cents in 2021.

It costs so much more to make a penny than its value that the U.S. Mint reported losing some $85.3 million last year on the nearly 3.2 billion pennies it produced.

Today, they are made mostly of zinc and some copper."

"The U.S. Mint estimated that it could save about $250 million over 10 years by suspending penny production"

"Americans throw away as much as $68 million a year in coins" 

"Rounding up and down to the nearest nickel shouldn’t affect the price that customers pay in a store, said Jeff Lenard of the National Association of Convenience Stores, an industry group.

Another argument against doing away with the penny: It could drive up use of the nickel. The five-cent coin cost nearly 14 cents to make last year.

The Canadian government said it would stop producing the penny in 2012"

"As pennies gradually left circulation, cash transactions were rounded to the nearest nickel."

"When the Canadian government removed one-cent coins, it noted that New Zealand and Australia had stopped producing one-cent pieces in the 1990s and it didn’t increase inflation."

"“Trump’s move doesn’t claim to permanently eliminate the penny, which would clearly be Congress’s decision,” said Robert Whaples, an economist at Wake Forest University who has argued that the mint should stop producing pennies. “Rather, it halts minting new pennies, and the decision about how many pennies to produce each year seems to be within the executive branch’s power.”"