A dollar bill, as we all know too well, is a fleeting thing. Not just because it leaves our hands so much more easily than it returns but because, as it changes hands, it wears out within about three years, and often sooner. A coin’s life span, by contrast, averages 30 years. That’s why several members of Congress are suggesting phasing out the dollar bill entirely and replacing it with a coin. The production savings could add up to $5.5 billion over those three decades, proponents say.
Coins are bulkier, but at least vending machines wouldn’t spit them back out at us for having untidy corners or a crease here or there.
But if Congress wants to save money on money, there’s no reason to stop at the dollar bill. The U.S. Treasury has been nickel-and-dimed for years on the production of nickels and, well, pennies, both of which cost more to produce than they’re worth. The cost of a penny is volatile because it depends on the metals market — pennies are made of copper-plated zinc — but figures for 2010 put the price of producing 1 cent at close to 2 cents, meaning that the government loses a cent for every one it makes. With 7 billion pennies manufactured per year, that’s almost $70 million lost annually.
And what do people do with pennies? They leave them on the cafeteria counter for the next customer or toss them into jars to be redeemed … someday. Pennies are a significant added expense for retailers, costing a couple of cents per purchase in added transaction time — including the seconds customers spend hunting for the penny in their pocket so they can avoid getting more pennies in change. The one-cent coin, let’s face it, is little more than a nostalgia item, a copper-clad anachronism whose absence few outside the zinc industry would notice. Since the 1980s, the U.S. military has done without the penny on its bases, rounding out transactions to the nearest nickel with no noticeable harm.
And that nickel? An even bigger loser, costing up to 9 cents each to produce. As President Obama sensibly suggested in 2010, this could be solved by making the nickel out of cheaper materials than the current copper-nickel alloy. The worth of today’s coins has nothing to do with their mineral content; they are merely tokens of value, like the dollar bill that we could do without, thereby saving many more dollars.