During just the first half of this year, nearly 5.4 billion pennies and almost 880 million nickels were minted. That’s a lot of change. But did you know it actually costs more to make a penny or nickel than what they’re worth?
Craziness right? Well, unfortunately, it’s the truth. Since the fourth quarter of last year, steep metal prices pushed the cost of manufacturing the penny and nickel above their face value.
The biggest culprit is the price of copper, zinc and nickel. According to United States Mint specifications, 5-cent nickels contain 75% copper and 25% nickel while 1-cent pennies contain 2.5% copper with the remaining zinc. The price of these metals have each gone up significantly since early last year.
And what’s the result? The manufacturing cost of the penny has fluctuated between ~1.5-1.7 cents and the nickel between ~8-10 cents. We’re losing money! And suddenly, thoughts of melting pennies and nickels for their metallic value start to wonder into one’s mind…
Now, this isn’t "new" news. In fact, the metal prices and production costs of these two coins forced the U.S mint to implement a no melt regulation earlier this year. Violators can face up to a $10,000 fine, or five year imprisonment, or both. At the time, United States Mint Director Edmund C. Moy said:
"The new rule safeguards the integrity of U.S. coinage and protects taxpayers from bearing the costs to replace coins withdrawn from circulation."
The metal costs most dramatically affect the penny and nickel. Although other countries have eliminated their penny equivalents and many suggest the same for here, that’s not going to happen any time soon. Even so, it would still leave a problem for the nickel. But further, it goes beyond just these two coins. The "profit margins" of other coins have suffered as well. Do taxpayers just have to grin and bear the extra costs? Maybe not…
Enter into the equation two very new bills, Senate [S.1986] and House [H.R.3330.IH]. These measures authorize the Secretary of the Treasury to set the weights and the compositions of circulating coins, thereby, providing an avenue for the mint to find solutions to fix this nightmare. Given the positive movement so far, it may just happen.
Last year over 15.5 billion circulating coins were produced. Should Congress come to a resolution and pass a new law enabling our coinage to change in composition and weight, while not causing problems in other areas – for example, forced vending machine changes – it could potentially save taxpayers hundreds of millions a year. Granted, that’s not going to help balance the budget. But it’s better than throwing money away!