Obama calls for lower cost of making pennies and nickels

It has long been common knowledge that it costs more than a penny to make penny. The recently proposed federal budget from the White House proposes lowering the cost of pennies and nickels.

A penny saved

The cost of making a penny was, according to the U.S. Mint, 0.93 cents in 2004. By 2006, according to USA Today, the rising costs of the metals used to make the penny resulted in the coin rising to a cost of 1.23 cents per coin to make, along with the cost of a making a nickel, which rose to 5.73 cents. The price of zinc increased 76 percent from January to May 2006, copper rose 68 percent at that time and nickel rose 42 percent. The dime and the quarter are both still turning a profit.

Copper, nickel and zinc prices have been fluctuating over time, but as it stands today, it costs 2.4 cents to make a penny. The cost of the raw materials alone is 1.1 cents and administrative costs involved in producing pennies amounts to 0.5 cents. A nickel costs 11.2 cents to produce.

Composition changed before

Pennies have not been made solely of copper since 1982, according to Time Magazine, when the composition of the coins were changed under the Reagan administration. The penny currently comprises 2.5 percent copper and 97.5 percent zinc. More copper is actually used to make nickels, which are 75 percent copper, 25 percent nickel.

The raw materials themselves are cheap, as a penny’s worth of copper and zinc, according to CNN, cost 0.6 cents, but the Mint buys coin blanks from producers and then stamps the coins. The cost of the copper and nickel that goes into nickels is worth about 6 cents.

Hope and change for spare change

Among the other proposals in the proposed federal budget from the White House, commonly referred to as the “Obama budget,” is a request that Congress authorize a change in the composition of the coins, could save $100 million per year.

[That would add up to a lot in payday loans]

However, the Treasury has been studying alternatives to the traditional metals for some time and has yet to come up with a viable alternative that would save on the cost of raw materials and administrative costs. Steel is often suggested. The Mint cranked out steel pennies during World War II, when there was a copper shortage.

Sources

Time

CNN

USA Today

US Mint: http://www.usmint.gov/faqs/circulating_coins/index.cfm?action=faq_circulating_coin