The True Cost of Producing a Penny: A Detailed Breakdown
In today’s economy a penny may not seem like much but it’s still a valuable coin. It’s the smallest denomination of currency in the United States but it’s also one of the most widely used. People use pennies to pay for everything from candy to gasoline but how much does it cost to produce a penny? Let’s take a closer look at the true cost of producing a penny.
The Raw Materials
The first thing to consider when looking at the cost of producing a penny is the cost of the raw materials. Pennies are made of copper-plated zinc which means they require both copper zinc as well as other materials like tin nickel. The cost of these materials varies depending on the market but on average it costs about 1.8 cents to produce a penny.
Minting Printing Costs
The next cost to consider is the actual minting printing of the penny. The United States Mint is responsible for producing pennies they use state of the art equipment to create these coins. However that equipment comes at a cost as does the labor required to operate it. On average it costs about 1.4 cents to mint print a penny.
Transportation Distribution
Finally there are the costs associated with transporting distributing pennies. Pennies are heavy take up a lot of space which means it’s expensive to transport distribute them. In fact it costs about 0.5 cents to transport distribute a penny.
The Total Cost
When you add up all of these costs you get a total cost of about 3.7 cents per penny. That means for every penny produced the government is losing about 2.7 cents. While this may not seem like a lot consider that in 2019 the United States Mint produced almost 8 billion pennies. That’s a loss of over $200 million!
The Future of the Penny
Given the high cost of producing pennies it’s no surprise that there has been talk of phasing them out. In fact some countries like Canada Australia have already stopped using their equivalent of the penny. However others argue that the penny has a sentimental value that it’s an important part of American culture. In the end the decision on whether to keep the penny or not will likely come down to economics public opinion.
In conclusion the true cost of producing a penny is much higher than its actual value. The raw materials minting printing transportation distribution costs add up to a hefty sum the government is losing money on every penny produced. While the future of the penny is uncertain one thing is clear – it costs a lot more than it’s worth.
