Final American Penny Is Pressed, And The Nickel Could Be Next
Last week, the final pennies were pressed at the US Mint in Philadelphia. While the penny will remain legal tender, banks and merchants are already reporting shortages.
The decision to end production of the penny is due to the fact that they cost around 5 cents to make, which begs the question about what’s the future for other American coinage, specifically the nickel, which has a net loss of around 9 cents per coin.
Nickels are made up of 75% copper and 25% nickel while pennies are copper-plated zinc; 97.5% zinc and 2.5% copper. The cost of both copper and nickel have doubled since 2016.
The US Mint and one of its suppliers, Artazn, have been studying ways to get the cost of making a nickel down to less than 5 cents, according to Mark Weller, the executive director of Americans for Common Cents.
The group is partially funded by Artazn, the self-proclaimed world’s largest and oldest producers of solid zinc strip and zinc products which also makes the blanks that are used by the US Mint to press coins.
“It just so happens that copper and nickel are two of the more expensive metals you could be using,” Weller said to CNN.
“Getting nickel production costs to close to 5 cents per coin could be completed within a year, with ‘new’ nickel that looks identical to the current nickel.”
Like the penny, the nickel is viewed as limited in terms of its usefulness, as many Americans are using coins less often every year.
David Smith, a professor of economics at the Graziadio School of Business and Management at Pepperdine University, stated that using cash less often would reduce the demand to drop the nickel and the cost of production. Smith himself is a coin collector who thinks there is enough nostalgia for coins in the US to slow down any move to eliminate them.
Weller said that getting rid of coins and attempting to move to a totally cashless economy will actually cause a slew of problems, particularly for low income consumers.
“The move away from cash really benefits big banks and credit card companies. They’re charging businesses every time someone swipes their cards, and those costs end up being passed onto consumers.”
Many merchants are looking to Congress to pass legislation to give them a sense of direction when it comes to the current shortage of pennies, as well as the future when it comes to rounding purchases to the nearest 5 cents should they not have a high supply of the coin.
However, a study done by the Federal Reserve Bank of Richmond performed this year found that rounding purchases to the nearest nickel would actually cost Americans a total of $6 million a year.
Both Weller and Smith told the publication that they don’t see the nickel being discontinued anytime soon. The Mint has lost money on every penny and nickel it’s made since 2006, and only this year, nearly 20 years later, did they decide to stop producing pennies.
“I’ve had reporters calling me about the future of the penny for the last 30 or 35 years. So I don’t see there being an immediate change,” Weller said.
Eric Mastrota is a Contributing Editor at The National Digest based in New York. A graduate of SUNY New Paltz, he reports on world news, culture, and lifestyle. You can reach him at eric.mastrota@thenationaldigest.com.
