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Pennies, Poverty, and a Reality Check

For my next task the “Consumer Power” badge asks scouts to collect all the pennies they get in their change for a month and watch the value “really add up.”

Now, I rarely have a quarrel with these tasks, but I hope the next version of the G.S. badge book revises this language. You can’t seriously look at this without knitting the brow and asking: Really?  REALLY?

This got me to thinking about savings, poverty, and the true value of a penny.

The idea of savings is an important one and central to this task. We’re lucky if we catch on to savings as adults.  But the kids I know are pretty smart, and I think most are smart enough to know pennies probably don’t add up.

All that aside, there was a potent byproduct of this task work. Turns out you can’t really think about the buying power of money–even loose change–without also thinking about what it means to have none in your pocket.

BADGE WORK REPORT: CONSUMER POWER

If you aren’t convinced that pennies are fairly worthless except for making very specific correct change, then please note: in 2008, the U.S. Mint acknowledged that it costs 1.7 cents to make one penny. Eight billion pennies are minted annually at a cost of $130 million — and an annual loss to taxpayers of $50 million* (source: http://abcnews.go.com/Business/story?id=4460935).

Yeah, it’s not $50 billion, but it’s no chump change, either. It’s the equivalent of 1,000 much-needed middle class jobs.

Anyway, back to the task at hand…

I embarked on the task under the assumption that pennies wouldn’t yield much at the end of a month. I also hoped I’d be wrong–it’s always good to have our assumptions smashed to bits. Let’s see what happened:

And Now, a Penny for YOUR Thoughts
(did you really think I’d get through this post without using this cliché?)

A couple of questions emerge from this for me. Chime in on one or all if you like:

  • If you were a kid, what would/should you buy with this money (68 pennies… or the whole $18.83)? Or what would you save for?
  • If you only had $18.83 in your pocket for the next week of your life, how would you prioritize that money?
  • What message do we want to share with youth re: the value of a dollar (or penny)? How we can best teach them to become informed consumers. This activity suggests that those pennies “really add up,” but we know that they don’t. And kids are killer smart; they know when we’re not being honest with them. So how should we really be talking to youth about the realities of consumerism and money?  I’m not saying we need to explain the Frank-Dodd Financial Services Regulation legislation’s answer to credit default swaps, but are kids too young to maybe open a savings account and set some goals?  (I don’t think so, but I’ll let actual parents do the talking on this.)
  • One other question to ponder. Should we stop minting pennies, or substitute them for something that costs less to make? And if that nets a surplus, how would you like to see that money spent or saved? Here’s a really interesting article on the debate…

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*UPDATE AND CORRECTION: An eagle-eyed reader revealed to me that my facts were wrong regarding the amount of money lost in minting pennies annually. I had it way off (that’s million with an “m,” Jean, not a “b.”) I’ve adjusted the copy to reflect reality. Apologies to readers earlier today!
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3 thoughts on “Pennies, Poverty, and a Reality Check

  1. Jean, I knew it cost more to make a penny than a penny, but I had no idea we were spending $50 billion annually to do so. WOW!!! Does that reflect the new penny design?

    I understand the psychological power of the penny, how $0 .99 seems so much cheaper than $1.00, or even $99.99 is more appealing than $100. I would imagine this perception largely drives the argument for not discontinuing penny production. However, I’m thinking perhaps $50B a year is enough incentive to discontinue…you could still pay to the penny with your debit card or a check, after all.

    And we’re already rounding the price on gas…it’s all whatever price and 9/10….so that remainder is already going somewhere; methinks into the coffers of Big Oil.

    • You know, there’s an argument that eliminating the penny would result in immediate inflation. I’m not an economist, but I see some logic to that. But keeping the penny doesn’t mean we have to keep the penny “as it’s currently made.” I’ve found no info on this, but what if it were smaller, or made without copper. People could still have their pennies — they just wouldn’t cost us a net loss of $50B/year, right?

    • Hey Stacy — Just had to let you know that an eagle-eyed reader pointed out to me that my math was WRONG, WRONG, WRONG on the annual lost revenue from minting pennies. Replace that “b” in “billion” with an “m”. Hardly the Madoff Ponzi scheme, but that’s still the equivalent of 1,000 middle income jobs…

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