The Mint Actually Loses Money Without the One-Cent Coin

Eliminating the penny won’t save the government money. In fact, such a move would have a significant negative impact on the U.S. Mint’s cost structure. Many overhead expenses at the Mint would remain and would need to be absorbed by other coins, increasing their per-unit costs. Additionally, without the penny, the demand for nickels would rise to fill the gap in small-value transactions. Since each nickel costs nearly 14 cents to produce, this shift would drive up overall production expenses for the government. Rather than saving money, eliminating the penny would increase and redistribute financial burdens.

“Many Mint overhead costs would remain and have to be absorbed by other coins without the penny,” said Mark Weller, Executive Director of Americans for Common Cents. “Also, there would be greater demand for expensive nickels, which means even more costs,” Weller added.

The U.S. Mint reports that the cost to produce a nickel in 2024 was 13.74 cents—almost triple the coin’s face value. If penny production were eliminated, nickel production would likely double, compounding the Mint’s losses.

Why Does the Penny Cost So Much to Make?

The high reported cost of penny production largely stems from how the Mint allocates its overhead expenses. Since 2011, the Mint has distributed these costs based on production volumes rather than the amount of direct labor required for each denomination. This methodology disproportionately impacts the penny, which requires fewer operations to produce than other coins. For example, pennies are manufactured using ready-to-strike (RTS) blanks supplied by the private sector, significantly reducing the Mint’s labor and operational costs. In contrast, nickels, dimes, and quarters require fabrication from solid metal strip, which involves 34 production operations—nearly three times as many as pennies—and demands higher levels of supervision, engineering, and security.

Meanwhile, the Mint’s overall production has plummeted. Total coin production dropped from 10.5 billion coins in 2023 to 5.9 billion coins in 2024—a 44% decline in just one year. Compared to four years ago, production is down 62%. Despite this, the Mint’s overhead costs remain relatively fixed, meaning these expenses are now spread across a much smaller pool of coins. This accounting approach inflates the reported cost of the penny and unfairly penalizes its production.

What About Rising Metal Prices?

While rising metal prices contribute to higher coin production costs, focusing solely on metal content ignores the significant role of the Mint’s overhead and cost accounting practices. The current accounting system double-charges portions of the penny fabrication process, further distorting its true cost. Applying the bulk of the Mint’s overhead to the penny—which accounts for only a small fraction of its operational workload—is both inaccurate and unjustified. Historically, the penny has represented 50% of the Mint’s coin production, yet it requires far fewer operations than other coins.

The Better Solution

The logical and fiscally responsible solution isn’t to eliminate the penny but to reexamine how the Mint allocates its overhead costs and focus on reducing the cost of producing nickels. Addressing these systemic inefficiencies would target the real drivers of financial losses while preserving the functionality of small denominations in everyday transactions.