I believe that it is time that we seriously ask ourselves why we still mint the penny. The half penny was eliminated in 1858, when it was worth over ten times what the penny is worth today. Assuming that the timing was correct before, this means that we should have eliminated the penny decades ago. The penny is now worth so little that nobody even picks it up off the ground, despite the old "lucky penny" adage.
Why should we eliminate the penny?
1) Waste of material: The U.S. Mint produces almost 12 billion pennies each year, yet nobody really wants the pennies they already have. Each penny weighs 2.5 grams, meaning that the U.S. makes 30,000 metric tons of pennies each year. This is, of course, why the zinc industry (the penny is 97.5% zinc) is lobbying to keep the penny in production.
2) Waste of money: The US mint produces about 14 billion pennies every year (over half of all coins made each year), at a cost of $100 million dollars.
3) Waste of time: Most cash transactions involve the exchange of pennies, leading to an increase in the time for the transaction to take place. Each person goes through roughly four of these transactions each day, with each transaction being slowed down on average 3 seconds (remember that we are including the occasional customer who spends 30 seconds looking for the penny in his pocket). Two people's time are wasted during each of these transactions, therefore leading to a total waste of 4 X 3 X 2 = 24 seconds per day. This may not seem like a lot, but it translate so 24 X 365 / 3600 = 2.4 hours per person per year. If each person's time is worth $15/hour then we arrive at the conclusion that each person is losing $37 per year, at a cost to the nation of about $10 billion per year. To give a rough benchmark for how important this is, consider the fact that we only spend about $20 billion per year on welfare for the poor.
The important point to note is that it is virtually impossible to buy something for less than a nickel, which means that we should not mint a coin worth less than a nickel. It is true that many prices would have to change, but not in any consequential way. Prices will go from being $2.99 to $2.95, as many have already done. This will have the effect of substantially decreasing the amount of change that has to be dealt with in any given transaction, thus making like simpler and transactions faster.
