The penny's days are numbered
The federal government is phasing out the penny to save money — and while change is hard, an Ohio business leader tells us losing the cents makes sense.
Why it matters: The coin's demise means prices for cash transactions will need to be rounded, impacting business' pricing strategies and consumers who rely on cash (typically older and lower-income Americans).
Catch up quick: The U.S. Mint will stop making the coins early next year. The Treasury Department placed its final order for blank templates last month.
Stopping production will save the government $56 million a year in reduced material costs, a Treasury spokesperson said. Production costs have risen from 1.3 cents to 3.69 cents for every penny over the past decade.
The big picture: For similar reasons, Canada discontinued its penny in 2012 and Australia and New Zealand stopped producing their lowest-denomination coins decades ago.
How it works: The Treasury told the Wall Street Journal businesses will need to round up or down to the nearest 5 cents once there aren't enough pennies to use in everyday cash transactions.
Cashless transactions will still be priced at exact change.
Zoom in: "I haven't heard a thing from our members about it," Ohio Chamber of Commerce president and CEO Steve Stivers tells Axios.
Typically, mandates concerning whether businesses can or can't take cash — like a state bill introduced in January — are more controversial, he says.
Local businesses are increasingly going cashless, including major institutions like sports arenas, the zoo and amusement parks.
Stivers said he will be paying attention to the rounding logistics as they play out.
Flashback: A former U.S. representative, Stivers sponsored legislation for pennies to be made of steel, rather than copper, zinc and nickel, to cut costs.
The intrigue: A 2022 Federal Reserve report found $14 billion — about 60% of actively circulating coins — is sitting in jars and not flowing in the economy.
The bottom line: "As we move to a more digital world, it's less and less important whether there is a coin to back something up," Stivers says.
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