“It’s expensive to mint coins, and it’s also expensive for businesses to process small coins,” Robert K. Triest, professor of economics at Northeastern University.
President Donald Trump campaigned on, among other things, cutting costs. More than a week into Trump’s second term, it seems his administration is sparing no expense — not even a penny’s worth.
The Department of Government Efficiency (DOGE), Trump’s cost-cutting task force run by billionaire Elon Musk, recently hinted at the possibility of decommissioning the one-cent coin.
For DOGE, the issue is one of straightforward math.
“The penny costs over 3 cents to make and cost US taxpayers over $179 million in FY2023,” DOGE posted on X on Jan. 21. “The Mint produced over 4.5 billion pennies in FY2023, around 40% of the 11.4 billion coins for circulation produced.”
Economists have long discussed retiring the penny as it continues to lose value over time, a process accelerated by inflation. Robert K. Triest, professor in the Department of Economics at Northeastern University, says there are good economic arguments for bidding it farewell.
“It’s expensive to mint coins, and it’s also expensive for businesses to process small coins,” Triest says.
Canada decommissioned its one-cent penny in 2012 after officials there determined the cost (1.6 cents per penny) didn’t justify continued production.
Even after Canada stopped producing its one-cent coins, they remained in circulation — and can be used as legal tender even today. The government advised that on cash transactions where pennies are not available, merchants should round to the nearest five-cent increment in a “fair and transparent manner.” Non-cash payments, such as by check, debit or credit card, would still be rounded to the nearest cent.
As part of the plan, Canada proposed melting down its penny supply and reselling the metals — zinc, copper and steel — to industrial manufacturers.
In the U.S., the problem is not only one of the cost of production, but of practicality. There are hundreds of billions of pennies in the U.S. that are never exchanged, according to one estimate. Philip Diehl, former director of the United States Mint, once noted that two-thirds of U.S. pennies produced between 1969 to 1999 had dropped out of circulation.
“The process of discontinuing the penny in the U.S. is a little unclear. It would likely require an act of Congress, but the Secretary of the Treasury might be able to simply stop the minting of new pennies,” Triest says.
“It will be important to have rules in place regarding how cash transactions that are not divisible by 5 cents should be handled, most likely by rounding to the nearest 5 cents, and also regarding how existing stocks of pennies can be used and exchanged,” he says.
If regulators are interested in pinching the penny out of circulation, why stop there? William Dickens, who taught economic and public policy at Northeastern, says the nickel and the dime may have also outlived their usefulness in an economy that sees fewer and fewer cash transactions each year.
“It’s silly to think that there would be any economic impact at all, even if we got rid of the nickel and dime,” Dickens says.
What would happen to prices if the Trump administration decided to decommission the penny?
Dickens says it would likely change the way commodities are priced — but not by much.
One possible objection to the move, Dickens says, is the line that businesses might raise their prices. But he thinks “the exact opposite would happen.”
“The item that once cost $2.99 might then cost $2.95,” Dickens says.
If Trump moves on the penny, it wouldn’t be the first time in U.S. history that the government decommissioned a coin. The U.S. used to produce half-cent coins beginning in 1793, when the U.S. Treasury began producing the first circulating coins.
The dollar was worth a lot more at the time compared to today. According to numismatic expert Ron Guth, the average skilled laborer was paid on average a dollar for 10 years of work in 1793.
The half-cent coin was discontinued in 1857.
Both Dickens and Triest agree: it’s likely no one would notice if the U.S. stopped producing pennies.
“It wouldn’t be a huge deal because the purchasing power of the penny has decreased over time due to inflation,” Triest says. “The percentage of transactions using cash has also decreased greatly over time, and now even with cash transactions, it’s not uncommon for a store to have a little dish of pennies, where you can take a couple if you need them, or contribute a couple if you’ve got some spare change to leave them for the next person.”