Sheridan, professor of economics, offered his perspective on the impacts of the Treasury Department stopping production of the penny.
As the U.S. Treasury Department moves toward discontinuing production of the one-cent coin, Elon University Economics Professor Brandon Sheridan weighed in on what it means for everyday commerce and the broader U.S. economy. His comments appear in a feature by USA Today investigating the impacts of the penny’s retirement.
In February, President Donald Trump ordered the Treasury Department to stop making pennies, arguing they cost more than they are worth. According to USA Today, each penny costs 3.69 cents to make.
“Some businesses are asking cash-paying customers to voluntarily round up for donations to avoid needing pennies to make change and to stay compliant with state and local laws, while other places are rounding down for everyone (not just cash payers),” Sheridan told USA Today.
And Sheridan says rounding down will “become costly for businesses over time,” but a penny shortage will likely accelerate the decline of penny usage.
“I also expect more and more businesses to move to a cashless model in the next 10 years, while strongly encouraging card usage in the interim,” said Sheridan. “This would negate the need for businesses to round transactions to the nearest nickel.”
Sheridan says that the nickel may also be on the chopping block, but not right now.
“The cost to consumers of rounding transactions to the nearest nickel is estimated to be around $6 million, the cost to round to the nearest dime is closer to $56 million,” he said. “Therefore, the cost-benefit analysis for taxpayers is not nearly as clear for nickels as pennies.”