During my Southwest flight to Los Angeles, I eagerly picked up the airline’s magazine, Spirit, a ritual I highly enjoy.  In reading the always edifying and out of the ordinary magazine, I ran across a page that read “It costs 1.8 cents to make a penny.” Now this wasn’t as enthralling as the fact that the U.S. Mint’s 2010 Annual Report showed a loss of $27.4 million for making a coin that spends most of its life in collection jars or on the side of streets. In the words of economist Greg Mankiw “The purpose of the monetary system is to facilitate exchange, but…the penny no longer serves that purpose.”  With consumers and businesses counting their pennies and cutting costs since the 2009 Great Recession, is it time for the United States to do the same?

The penny, according to Wikipedia, has been up for debate for quite some time.  Here are a few of the arguments for its elimination:

Lost productivity and opportunity cost of use

With the average wage in the U.S. being about $17 per hour in 2006, it takes about two seconds to earn one cent. Thus, it is not worthwhile for most people to deal with a penny. If it takes only two seconds extra for each transaction that uses a penny, the cost of time wasted in the U.S. is about $3.65 per person annually, totally to about $1 billion for all America.

Limited utility

Pennies are not accepted by all vending machines or many toll booths, and pennies are generally not accepted in bulk.
Prices would not be higher — Research by Robert Whaples, an economics professor at Wake Forest University, used data on nearly 200,000 transactions from a multi-state convenience store chain. His findings show that rounding would have virtually no effect. Consumers would gain a tiny amount – about 38/1520th (1/40th) of a cent per transaction.

Hazards

The reduced-cost clad zinc penny, which has been produced since mid-1982, holds additional dangers when swallowed by children and others, unlike all previous U.S. coins. If the copper plating is breached, the penny quickly corrodes into a sharp-edged object, which is more likely to lodge in the digestive tract.  Any amount of zinc and copper digested from the lodged pennies may be toxic. An 11 lb (5-kilogram) dog was fatally poisoned by swallowing two pennies.
Although the penny was one of the first coins authorized to be minted by the American government and the first coin to be put into production, I hope Abe would forgive us for its retirement. As it stands, two bills have been introduced in the U.S. Congress that could have ceased the production of pennies, but neither bill was ever approved.  If Congress ever approves the elimination of the penny, the nickel would be the lowest-value coin.
Resources: Spirit Magazine