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The death of the penny
00:17:35
Why the U.S. government halted production of the penny, and what it could mean for how much things cost.
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- [00:02]
A
After 232 years, America officially stopped making pennies last week. The penny carries an almost mystical quality. Find a penny, pick it up all day long, you'll have good luck. Toss a penny in a fountain, and your wish will come true. For me, the penny has always held a special meaning in my family. Our lucky number is 11. And sometimes one of us will find a single dime and a single penny together, and we'll pick up the 11 cents. And it feels like it's a message from a beloved family member we've lost. It's like my dad saying, hey, kid, I'm here. So the news of the penny being taken out of production left me with a lot of feelings and questions. One of the people who's looked into this recently is White House economic correspondent Jacob Bogage.
- [00:58]
B
Financially, don't expect this to make a whole lot of difference, but it is a moment. It is a moment that is worthy of us taking a pause and going, wait a minute. The economy and the world has changed around us, and maybe we haven't noticed until right now.
- [01:22]
A
From the newsroom of the Washington Post, this is Post Reports. I'm Colby ekowicz. It's Thursday, November 20th today why the penny is being discontinued now and what it could mean for how much things cost. Jacob, thanks so much for being here to talk about pennies.
- [01:47]
B
Always fun to be here.
- [01:49]
A
So what does it mean that the penny is now out of production? Like, can I still use my pennies?
- [01:55]
B
You can still use your pennies. It just means we're not going to make more pennies. There's not a penny shortage. There are 300 billion pennies in circulation. Whoa. The problem is most of them don't actually circulate. They kind of sit in drawers or in couch cushions or lying on the ground or whatever. And so even though there's that many of them in circulation, they're not being exchanged. No one's paying with them. And so there's plenty of them out there, just no new ones.
- [02:27]
A
So is that why the government decided to stop making them? Because they were like, well, people aren't really using them anyway.
- [02:32]
B
That was a major reason why. Yeah, people aren't using them anyway. And this is part of the argument the Trump administration wants to make about how it is cutting costs? It will save $56 million a year, according to the treasury, just in materials alone, by ceasing production of the penny. The problem is our economy is a $7 trillion economy. 56 million is like finding coins on the couch.
- [03:00]
A
Why do you think Trump focused on this now. Why is now the moment to stop making the penny?
- [03:06]
B
I have no idea. He made this a priority. Pretty soon after returning to the White House in February, he posts on Truth Social, his social media platform, saying, I'm ordering the Treasury Department to stop minting pennies. And then by November, they mint the final ones. So this was something that he clearly had a personal fixation about, as opposed to a policy fixation about what our economy should be like.
- [03:36]
A
And the President can just do that. The President doesn't need congressional approval, or he can just tell the treasury, and the treasury can just be like, okay, we're not going to make this anymore.
- [03:44]
B
Yes, the Treasury Department controls the mint and controls the production of currency, but they can't take currency out of circulation. So pennies, if we wanted to get rid of the penny as a. As legal tender, that would have to be a law passed by Congress.
- [04:01]
A
So last week, they actually minted the last pennies ever. And you were there to see it. What was that like?
- [04:10]
B
It was a weird event. It didn't quite go off the way it was supposed to go off. Treasury Secretary Scott Besant controls the currency. He should be the one to mint the final penny. Instead, he couldn't make it. So the Treasurer of the United States, which is a very different job, minted the final pennies. Secretary Bessant, I met with him last week. He was looking forward to being here with you guys to be in this historic event. Unfortunately, he's in New York doing the people's business. He was supposed to do two of them that would enter circulation. Instead, they made collector's items. They have, like, a little. They call it a privy mark. It's a little Omega symbol on them on the front of the penny. What we're gonna do is we're gonna have these pennies and we're gonna auction them off. They said they were gonna make only two of them. Then they made five of them. I mean, there was a lot of, like, this thing happened, not quite the way it was supposed to happen, but how many people can say they were there to see the final penny?
- [05:12]
A
So you said they made five commemorative pennies?
- [05:17]
B
Yes.
- [05:18]
A
What are they gonna do with these?
- [05:20]
B
They're gonna auction them off.
- [05:22]
A
Who's gonna auction them off?
- [05:23]
B
The mint. The Treasury? The. I don't.
- [05:25]
A
The US Government.
- [05:26]
B
This. Yes, the US Government.
- [05:27]
A
Do we have any sense of what the starting bid will be for?
- [05:31]
B
We don't know what the starting bid will be, but I talked to a rare coin expert, and he said this is a wild card in the rare coin market for something this rare. It's not unusual for them to go for well over a million dollars each. These could probably go for far greater than that. Is it absolutely insane to buy a penny for more than a million dollars? I'm just saying if I had a million dollars, I would buy a fleet.
- [06:03]
A
Not how you would spend that.
- [06:04]
B
No, I'd buy a fleet of jet skis.
- [06:05]
A
Yeah, but it's worth a million dollars today. It could be worth $10 million in 50 years.
- [06:11]
B
It's an investment.
- [06:13]
A
I get why it makes financial sense for the US Government to stop producing pennies. And I know that most of us are using our phones or credit cards to pay for things, but there are people out there that still pay in cash. It's probably not a lot of people, but there are people. So, like, don't we need pennies so that people can pay in exact change or get their exact change back when they buy something?
- [06:38]
B
Yeah, we do need pennies for exact change. And we have them. We have 300 billion of them. A lot of people don't want them. People don't use them. The theory is that these items will find their way to the people who want them and need them. I would not encourage you to go out collecting them assuming they're going to increase in value or become collector's items. They're not. And if you pay in cash at the store, you can expect your change to get rounded up or rounded down to get you to a five or a zero.
- [07:13]
A
Oh, that's interesting. Cause, I mean, I feel like a lot of things are charged 1999. Right. So it makes you feel like you're not spending $20. Could you see that changing to now being 1995 or.
- [07:27]
B
Yeah, that's one of the things we could see changing. But also, we're not like a single purchase economy. We are by several things.
- [07:36]
A
That's true.
- [07:37]
B
And there's actually been academic studies on this, which is the last digit at the end of your receipt is actually random. And so you're not going to see businesses shortchange you to get you to a five or a zero. I mean, they may sometimes round down, but they're just as likely to have to round up to get you to a five or a zero. So any of the exact change inflation should come out in the wash over time.
- [08:11]
A
What you're saying is, just because the penny is no more, it doesn't mean that things are going to get more expensive. Because I could see people being worried.
- [08:19]
B
About that I heard from a lot of folks on social media and the main concern was cost of living. Am I gonna get, no pun intended, am I gonna get nickel and dimed now because things are gonna cost more or I'm not gonna get my exact change or whatever it is? And the answer to that, again, is generally no. But that's a real concern that people have. And I think that speaks to cost of living concerns that we've talked about on the pod before and the way voters think about what their priorities are.
- [09:02]
A
After the break, some penny history and whether other physical money might become a thing of the past. We'll be right back.
- [09:19]
C
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- [11:37]
A
Maybe I'm like waxing too nostalgic for the penny, but the penny has been around almost as long as our nation has been around, just about. Walk me through that history a little bit.
- [11:50]
B
1792, Congress passes a law saying we need our own coins. And they denominated them in a cent, in 5 cents and 10 cents, et cetera. And that gives rise to the penny, which starts production in 1793 in Philadelphia. It is a 100% copper coin. Over time, that gets more expensive. And so we start seeing copper and zinc alloys during some periods of war. We start seeing steel pennies because we need copper for other things to militarize. Steel pennies are really bad because they are super malleable and they're dentable. So we move away from steel pennies. I did so much research for this story to confirm that the United States made pennies for 232 consecutive years. Because if you just look at the dates on the coins, there are no pennies with the date 1815 on them.
- [12:50]
A
Why?
- [12:51]
B
We just chose not to update the stamp on the coin from 1814 to 1815. So none of them have the year 1815. We just skipped that. So we have 1814 pennies, 1816 pennies, 18. We keep playing around with different kinds of materials. Eventually we get to the 1980s and we say, these alloys are stupid. Copper costs too much money. We're gonna do a zinc item with a copper plate on it. And that's been our.
- [13:19]
A
That's what we have now substance ever since.
- [13:21]
B
The designs have changed a little bit. There was a penny with wheat on it. There was a penny with the Lincoln Memorial on it, which you and I grew up with, I imagine. And now it has the $0.01 kind of shield on the back of it.
- [13:34]
A
You said there are still 300 billion pennies in circulation. Will there be a time when pennies just don't exist at all?
- [13:44]
B
So the average lifespan of a coin is about 30 years. Okay, but that is like a coin out in the world, like getting passed between people. Is it surviving until it's no longer serviceable? It's not. When I put a coin in a Jar, and then I never take it out.
- [14:01]
A
Right.
- [14:01]
B
That's what we don't know about yet. How long until they end up in all the piggy banks? And then we don't know what to do with them. Can we redeem them at the bank? What financial institutions will want these things, to exchange them for other currency? Only Congress can take a coin out of circulation.
- [14:21]
A
I mean, do you see a future where other coins are going to be canceled and maybe even, like, paper bills will be obsolete?
- [14:33]
B
Paper bills are super cheap to produce, so I can't imagine the Mint ever getting rid of paper bills. Coins, on the other hand, yes, absolutely. Could see more coins on the chopping block. The nickel is probably the most vulnerable. The nickel's 5 cents. It costs about 14 cents to produce.
- [14:56]
A
Wow.
- [14:56]
B
Yeah. Do you use nickels, Colby?
- [14:59]
A
I mean. I mean, only to give my daughter things for her piggy bank.
- [15:04]
B
Yeah, we don't use nickels, so that's really expensive. The other thing, when you get rid of coins because you're encouraging a move toward a cashless and electronic economy, you actually have more flexibility in denominations. You can go smaller than $0.01. Why not go with half a cent? Why not go with a third of a century? You can drag that decimal point out on the end of your receipt for as long as you want if you're paying on your phone or if you're paying electronically, because the computer takes care of all that math. It's similar to what people do with Bitcoin. And with cryptocurrencies, you can trade in incredibly small denominations of electronic currencies.
- [15:45]
A
What's the benefit of that?
- [15:46]
B
It's more exact. It is more efficient in the market because, you know, you and I are. Should this thing cost $0.01 or should it cost half a cent? Oh, I'll meet you in the middle at 3/4 of a cent.
- [15:59]
A
Right.
- [15:59]
B
I mean, like, there's more optionality there.
- [16:02]
A
Okay, so there's, like, market benefits to getting rid of the penny. But I want to ask you about the culture of the penny because it feels very ingrained in our culture. I mean, there's phrases like penny for your thoughts. There's the penny loafer shoe, there's songs written about pennies. It's almost like it's a piece of our national character. What would you say to people like me who feel kind of nostalgic about it, who are feeling maybe a little sad about pennies being taken out of production?
- [16:34]
B
I was talking with this professor named Robert Waples at Wake Forest University. He. In 2007 did this study that I alluded to earlier about the digit at the end of your receipt and found that it's randomized. And if we get rid of the penny, it's just as likely to be rounded up as rounded down. And he kind of turned that into his life. He became the leading advocate for getting rid of the penny. And when I talked to him, he said, this is the perfect time to get rid of the penny. Because when President Trump announced he wanted to do this, the average hourly wage in the private sector in this country was $36 an hour. So do the math to break that down. It comes out to $0.01 per second. So the average American worker, their time was worth one penny per second. The average wage right now is $36.50 our time. One second, the one second it takes to reach into your pocket to take a penny or scoop down and, and pry one off the street. You are losing money on that transaction based on what your time is worth. And that is mind blowing to me. And so when we think about the penny in regard to our national character, we should think about it in terms of what utility is this going to have for us? And you know, the most precious currency we all have is time. It is not dollars. It is not cents. It is time. Our time in this case is literally worth more than this piece of currency.
- [18:25]
A
Well, Jacob, thank you so much for coming on.
- [18:27]
B
Thanks, col.
- [18:34]
A
Jacob Bogage covers the Trump administration's economic policy for the Post. That's it for Post reports. Thanks for listening. Black Friday is just around the corner and for a limited time, you can access the Washington Post for just 99 cents. That's unlimited access to all of the posts for only 99 cents every four weeks. That's a great deal for the first year. After that, it'll cost $12 every four weeks and you can cancel anytime. But don't wait. This Black Friday seasonal offer won't be here for long. Go to washingtonpost.com subscribe and grab this deal before it's gone. That's washingtonpost.com subscribe. Today's show was produced by Sabi Robinson. It was edited by Eero Plotnik and Peter Bresnan and mix by Sam Behr. Thanks to editor Mike Madden. I'm Colby Ekowitz. We'll be back tomorrow with more stories from the Washington Post.
- [19:39]
B
We love you, penny.
- [19:40]
A
We love you, penny. Bye, p.e.
- [19:53]
D
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