We get pennies and all the time. While they serve as a means to make exact change for some buyers’ purchases, you can find lonesome pennies laying on the street, hoping for a superstitious person to pick them up for good luck. Are pennies and nickels, indeed, worthless? Technically, they are costing more to produce them than what they’re worth. Though not a devastating loss considering the budget deficit stood at about $680 billion, U.S. taxpayers reportedly lost $105 million due to the costs of producing pennies and nickels.
A look at the production methods make it seem like the US government is hustling backwards. Pennies are made of zinc and copper and cost 1.8 cents to make while nickels are made of copper and nickel, costing 9.4 cents a pop. Conversely, a dime cost 4.6 cents to make, a quarter cost 10.5 cents and dollar bills cost 5.4 cents each. One of the problems is that so many more pennies and nickels have to be produced to make a dollar than any of the other denominations.
President Obama has made it a point to “assess the future of currency” and eventually devise “alternative options for the penny and nickel” in his 2015 budget. There are a few solutions to this dilemma. One solution would be to change the materials used for pennies and nickels to cheaper metals like Canada’s 95% steel nickels whose face value exceeds production costs. The other solution would be to just nix pennies and nickels altogether. Canadians dumped their penny when its production costs neared 1.6 cents.
Some charts displaying the cost of currency can be viewed below. More information on this topic can be seen here.