Inflation may make a penny worth less — but it also makes that penny cost more.
The rising prices of raw materials have sent the costs of manufacturing coins soaring over the past two years, adding nearly a full cent to the cost of producing each penny. It now costs more than 2.5 cents to mint and distribute each penny coin, the federal government said in a report to Congress.
Making a nickel now costs more than 10 cents.
The prices to make dimes and quarters also rose, though the government still comes out ahead in those cases because their face value is higher and the dime is so tiny that it doesn’t require as much material.
“The average price of copper, nickel and zinc, which are the primary metals in each coin, have increased each year, resulting in an overall increase in the cost of metal for each denomination,” the U.S. Mint said in its report detailing the situation.
Some members of Congress said it’s time for the government to cut its losses and figure out savings.
“It’s absolute non-cents that American taxpayers spend 10 cents to make just one nickel,” said Sen. Joni Ernst, Iowa Republican. “Only Washington could lose money making money.”
She and Sen. Maggie Hassan, New Hampshire Democrat, announced legislation Thursday that would allow the Mint to switch its production methods to save money on raw material costs.
“This commonsense, bipartisan effort will modify the composition of certain coins to reduce costs while allowing for a seamless transition into circulation,” she said. “A penny saved is a penny not borrowed.”
Losing money on some coins has been standard for nearly two decades, but it seemed manageable when the loss was less than a cent per penny or two cents on the nickel.
Costs in the past two years have made the situation acute.
It now costs 2.4 cents to obtain the materials to make a penny and roughly three-tenths of a cent for administrative and distribution costs, for a final tally of 2.72 cents per penny produced in fiscal 2022.
In 2020, before the Biden administration and the round of severe inflation, a penny cost 1.76 cents to produce.
Making a nickel rose from 7.42 cents in 2020 to 10.41 cents in 2022.
The mint produced 1.4 billion nickels in 2022, with a total face value of about $72 million. Manufacturing cost about $150 million, resulting in a net loss of about $78 million.
Making 5.5 billion pennies lost Uncle Sam another $92.7 million.
The dime and quarter are still moneymakers, offsetting the penny and nickel losses.
One bright spot in this week’s report is that the Mint is making fewer coins, which keeps the penny and nickel losses down.
Nearly 8.2 billion pennies were minted in 2020 and just 5.4 billion last year. If production remained the same, the government would have lost $140.6 million on producing the penny.
Attempts to change the compositions of coins aren’t new, and the Mint has been studying options for years.
It has looked at nine proposed modifications, such as using copper-plated steel for the penny or an alloy known as C99750T-M, which contains less copper and nickel and uses zinc and manganese for minting nickels.
Using C99750T-M could have shaved $26.2 million off the loss from minting nickels last year.
The Mint said it performed large-scale testing on the new penny last year and is now doing small-scale refinements.
The nickel alloy, meanwhile, still needs large-scale testing to ensure a seamless transition.
Other options could save even more money, but automated machines could struggle with them.
The legislation from Ms. Ernst and Ms. Hassan would require the Mint to consider the seamlessness of the transition and how well the new versions would work in automatic coin machines.
“When it comes to fiscal responsibility, it’s just common-cents to use every tool at our disposal,” Ms. Hassan said.
Their legislation is named the Coin Metal Modification Authorization and Cost Savings Act.
Chances for change are iffy.
For decades, the penny has faced — and successfully fended off — calls for its expiration.
