Penny for your thoughts? Here’s a thought: do we even need the penny?
Lesson summary
Hi there everyone, I’m Jeff and this is Plain English, where we help you upgrade your English with stories about current events and trending topics. And sometimes, the stories are about whatever catches my interest that week. Today is one of those days.
“Penny for your thoughts?” That’s a question you can ask if you want to know what someone’s thinking. But that’s not a common expression these days, probably because a penny isn’t worth very much anymore. Today, we’ll talk about what six countries—plus the euro zone—have done—or not done—with their least valuable coins.
In the second half of today’s lesson, I’ll show you a very common English expression: “more trouble than it’s worth.” This is a very common thing to say, so stay tuned for that, coming up later in this episode.
This is lesson 655, so that means JR, the producer, has uploaded the full lesson resources to PlainEnglish.com/655. That is where you can find the transcript, PlainEnglish.com/655.
I think we’re ready. Let’s get going.
The fate of the penny in 7 currencies
Canada, Australia, New Zealand, the euro area, the United States, Switzerland, and the United Kingdom: they all have currencies that are within about 50 percent of one another in value. For perspective, in each of these countries, about five to seven dollars, euros, francs or pounds can buy a Big Mac at McDonald’s.
But the curious thing is that these countries don’t all treat their smallest coins the same. Australia and New Zealand abolished their pennies—the one cent coins—in the 1990s. New Zealand went a step further and eliminated its five-cent coin in 2006. Canada eliminated its penny in 2012.
In Switzerland, one centime is one-hundredth of a franc. But the one-centime coin was used so rarely that Switzerland stopped making it in 2006.
So we have Canada, Australia, New Zealand, and Switzerland which all, somewhat recently, eliminated their one-cent coins. What happened when they did that? Retailers that accept cash round the final price of a transaction to the nearest coin, usually five cents. Bank balances and electronic payments can all be divided into hundredths. It’s only when paying with physical cash that prices are rounded.
The euro area is a funny case. The one-cent coin and the two-cent coin are legal tender in the whole euro area, so the coins can be used in all twenty countries that make up the euro currency zone. But not every country produces these small-value coins. Several countries, including Belgium, Finland, Ireland and the Netherlands—they don’t produce one- and two-cent coins anymore. In those countries, cash prices are rounded to the nearest five cents, even though merchants still accept those smaller-value coins.
In 2018, the U.K. government proposed eliminating two coins and one bill: it wanted to retire the one- and two-pence coins and the £50 banknote. Nobody objected to the loss of the £50 note. But retailers, philanthropies, collectors, and consumers all protested the loss of the smallest-value coins. The government reversed course —the coins and the £50 note are still in circulation.
In the U.S., the penny is alive and well . The Treasury mints between five and nine billion new pennies per year. People do use them, and it’s rare for retail shops to round up or down. Occasionally, someone points out that penny production is not economical: it costs about 2.72 cents to make a one-cent coin.
That might be worth it if each penny were used many times over its lifetime. But that’s not what happens. Many pennies in all these countries are used just once: after that, they’re discarded, lost at home, or even thrown in the trash.
People often don’t even consider a penny worth their time, like it’s not even money. In the U.S., for example, the average hourly wage is $35.00. That means it takes less than two seconds at work to earn a penny. So bending over to pick one up off the sidewalk is, literally , more trouble than it’s worth.
So why do the U.K., U.S., and some euro countries still keep their lowly coins? One possible reason is inertia. Yes, pennies cost more than their face value to produce. But the cost is miniscule in comparison to each country’s budget. Another reason is that people are nostalgic for pennies. They were the first coins they touched as kids. Many countries have had many designs over the years, so enthusiasts like to collect old pennies.
Retailers like the penny because they can advertise “charm pricing,” ending a price in a 9, so 99 cents. This is less of an advantage in the U.S., though, where sales tax is applied on top of the sticker price at the register. Some consumers are protective of their pennies. They think retailers would always round up, and never round down.
The American penny features the most popular president, Abraham Lincoln, on the head: he’s been on the penny since the 1870s, so eliminating it would break with a long tradition in the U.S. Charities like pennies, too. Cash and spare change fundraising is an important way for non-profit organizations to raise money.
Still, time is not on the humble penny’s side. Cash transactions are falling: they represent only about 15 to 20 percent of transactions in most countries. And inflation has taken its toll . Just in the last few years, prices are 20 percent higher—that means, each penny is 20 percent less valuable.
Jeff’s take
Mexico is a funny case. In Mexico, about seventeen pesos make a dollar. That means one peso is equal to about 5.8 U.S. cents. There are half-peso coins, 50 centavos. And there are even five, ten, and twenty centavo coins—they’re tiny, too. Some retail shops give change using smaller coins, but they most often round up or round down to the nearest one peso.
So at the exchange rate, it’s like Mexico doesn’t use a coin equal to the U.S. penny, and they seem to do just fine. But prices are lower in Mexico, so in terms of what you can buy with one peso—it’s much more than five U.S. cents.
It does result in some strange behavior. I’ll tell you a funny story. Here in Mexico, you buy eggs by weight. If you want one egg, you can buy one egg. Out of habit, I still buy them in multiples of six. Anyway, I was buying eggs one day and the total price, per the scale, ended in 42 centavos. And that would mean the seller would round down to the nearest peso.
But listen to what he did. He looked closely at the eggs he had selected for me. And he took the smallest egg off the scale and replaced it with a bigger one, so that the same number of eggs weighed more.
And he tried that once or twice more and it still didn’t tip the scale over 50 centavos. So someone else from the shop came over to look closely in the whole inventory to find the biggest egg to give me, and finally, they found one so big that tipped the scale over 50 centavos, so they could round up to the next peso.
So, I got bigger eggs and paid a peso more than I would have with my original selection. It took several minutes. But I got much more than one peso’s worth of entertainment out of watching all this.
Great stories make learning English fun
