Why do we still make the penny? (PART II: Chipotle example; the nickel, too?)
[This is Part II to “Why do we still make the penny?”]
The premise of my last post is that we should POSSIBLY follow Canada and several other countries in eliminating the penny. With QE3 and the devaluation of the currency, expect price increases in gold, silver, copper, zinc, and the rest. Coins will cost far more than their value to make.
There is a group called Citizens to Retire the U.S. Penny that I didn’t mention in the previous post.
There’s also this article, from the New York Times:
August 28, 2012, 1:30 pm
Is a Penny Rounded a Penny Lost? Ask Chipotle
By ANN CARRNS
As The Consumerist pointed out, rounding to the nearest nickel isn’t really a big deal, as long as the restaurant is rounding down. But if it rounds up, you pay extra — even if it’s just a penny or two.
In one sense, this seems like a smart idea. Who wants excess change clogging up their pockets, anyway, especially if it means you’ll get your food faster?
But a few penny-pinchers (my description, not Mr. Arnold’s) did object. So as of August, he said, the chain is only rounding down. (Also, receipts should now have a line showing the impact of the rounding math.) He said he didn’t know of other outlets that round receipts.
Do you think rounding of meal receipts — up or down — to eliminate pennies is a reasonable policy for a busy restaurant?
The argument for eliminating the nickel seems just as strong, or even stronger. It costs 11.45 cents to make a nickel? From FITSNews:
The Nickel, Too?
By fitsnews • on September 4, 2012
Well guess what … it turns out that the cost of producing an American nickel is also more expensive than the coin is worth. According to data released by the U.S. Mint, the unit cost for producing a nickel is 11.48 cents. Meanwhile the unit cost for a producing a penny is 2.41 cents. In other words, it costs more than twice as much to make both of these coins as they’re worth – something to ponder as the national debt eclipses the $16 trillion mark.
How many pennies did the government make a year ago? Forty-nine billion.
(By comparison it costs 5.65 cents to mint a dime and 11.14 cents to make a quarter).
Producing the nickel and the penny has been a money losing proposition for the last six years – although the $116.7 million bath the taxpayers took during the fiscal year ending last September was roughly three times greater than the loss incurred the previous fiscal year.
Who would buy up a ton of coins? From CNBC:
Kyle Bass’s Nickel Collection
Published: Wednesday, 5 Oct 2011 | 1:22 PM ET
By: John Carney
Kyle Bass has a lot of spare change.
The founder of Hayman Capital, the Dallas-based hedge fund that profited from the collapse of the housing market, bought 20 million nickels, according to a new book from Michael Lewis.
The catch is that melting U.S. coins is illegal. In 2006, the U.S. Mint reacted to rising metal prices by passing an interim rule that banned melting coins. In 2007, that rule became permanent.
“The rising commodity prices of copper, nickel, and zinc have increased the value of the metal in both pennies and nickels so that the content of these coins now exceeds their face value,” the Mint explained. “There is concern that speculators could remove pennies and nickels from circulation, and sell them as scrap for profit.”
Here’s a Huffington Post article (and video) on the Vermont store that I mentioned in a comment on the previous post:
Vermont Store Bans Pennies
Posted: 09/14/2012 1:40 pm
Power Play Sports in Morrisville, Vt., put the new policy in place earlier this month. The sporting goods shop will still take customers’ “outdated, outmoded, overpriced nuisance of coinage” owner Caleb Magoon told ABC News. However, the store is no longer “actively using them,” he said.
Unlike Chipotle — which was caught rounding change down, cheating customers out of their pennies — the Vermont store will round customers’ change up to the nearest nickel. That means the store could lose a maximum of four cents on any cash transaction, Magoon tells NBC. No big, he implies.
Canada recently joined several countries that have already dropped pennies, or their equivalent, from their currency, including Australia, New Zealand, Brazil, Israel and South Africa.
The problem will only get worse as we continue to lose millions of dollars making pennies and nickels. We should at least look at what Canada, Australia, New Zealand, Brazil, Israel and South Africa have done.