Making nickels is ‘pricier’ than producing pennies

We are learning that the days of the penny may be numbered, as the federal government is planning to cease production of the one-cent coin when the current supply of blank metal discs is exhausted. This is expected to occur in early 2026.

By eliminating pennies, the U.S. Mint says it can save $56 million a year. It now costs nearly 4 cents to make a single penny.

Ben Blatt of The New York Times said coin production at the U.S. Mint facilities varies from year to year, “because orders for each denomination of coins come from the Federal Reserve System in Washington, D.C., and these orders fluctuate each year, depending on demand.”

“It’s unclear exactly how high demand would be for nickels in a penny-less world, but it’s likely that it would be higher than today,” Blatt wrote.

Addy Bink of Nexstar Media did the math. “While the United States is technically ‘losing’ money on the penny, the disparity between nickel production costs and its face value is even worse,” she wrote.

“According to the U.S. Mint, producing nickels has remained above face value for nearly 20 years. In fiscal year 2024, it cost nearly 14 cents to make a five-cent piece,” Bink wrote.

Hence, excessive production costs for making nickels could swallow up any savings gained by eliminating the penny, she said.

 

Secretary of the U.S. Treasury Scott Bessent said: “No problem. The U.S. Mint can break even on nickel production by changing the composition of the coins.” 

Currently, nickels are made of cupronickel, which is a copper-nickel alloy (75% copper/25% nickel).

Another variable factor is the environmental impact and costs associated with the mining of zinc, copper, nickel and other metals, said Dr. David Smith, a professor at Pepperdine University in Malibu, Calif.

We need to get more familiar with the nickel. The coin features the likeness of Thomas Jefferson, America’s third president and primary author of its Declaration of Independence. The Jefferson nickel debuted in 1938 as a replacement for the Buffalo nickel.

The U.S. Department of the Treasury chose artist Felix Schlag to design the first Jefferson nickel. According to History.com, Schlag based his profile of Jefferson, wearing a period coat and wig, on a marble bust sculpted by France’s Jean-Antoine Houdon.

 

 

In 2006, the current depiction of Jefferson was designed by Jamie Franki and based on an 1800 painting of Jefferson by Rembrandt Peale.

The process of eliminating the one-cent coin can present some troublesome obstacles, but the United States doesn’t have to reinvent the wheel. Fortunately, three English language-speaking nations – Canada, New Zealand and Australia – have successfully “retired” their one-cent coins in recent years. We could learn from their experiences. Surely, they will be willing to share intelligence.

 

Economists remind us that “U.S. pennies will remain legal tender, and more than 114 billion pennies ($1.14 billion) are still in circulation.”

That’s not chump change…but many pennies are hiding out in coin jars in a plethora of American households. 

Dr. Jay L. Zagorsky, an associate professor at Boston University, says eliminating the penny requires investment in an “awareness campaign” to inform and educate ordinary citizens about how our money system “is going to work” going forward.

 

The problem is: Decision makers who inhabit Washington, D.C., and other urban, metropolitan areas, are insulated from Main Street, U.S.A., and are out of touch with folks who reside along the “blue roads” and the dirt roads that crisscross rural America…who are still cash-and-coin oriented.

Writing for CNBC, Kevin Williams said there are “pockets of population around the country” where people still use pennies regularly. One is in Geauga County in northeastern Ohio, the home of a large Amish community.

Dr. Zagorsky suggests that all “the suits” see is the data that show “fewer than one in five payments is made today with cash/coins.”

Until that number becomes “zero in five,” eliminating the penny “could cause more problems than it solves,” Dr. Zagorsky said.