The CEA Blog

In August, 1974 the United States’ economy had seen better days. The bills from the Vietnam War were coming due, and the OPEC oil embargo against America had caused the price of a barrel of oil to quadruple during the past year. Caused by these and other economic factors, the country was now experiencing inflation at an unprecedented peacetime rate. 

Simply put, inflation is an increase in the price of goods and services. Low levels of price increases over time are normal, but the United States was seeing inflation levels of upwards of 9% in 1974 alone. The higher the inflation rate, the less purchasing power each dollar has. To make matters worse, teachers in Columbus Public Schools weren’t earning much to begin with. 

In 1974, a starting teacher in Columbus Public Schools who had recently graduated from a local college with a Bachelor’s degree could expect to make $7,600 per year, amounting to roughly $292.30 every two weeks before taxes. Teacher experience in Columbus Public Schools was not measured past 14 years in 1974, resulting in a teacher with their PhD and 14 years of experience to take home the schedule maximum of $16,811 per year.  

To the consternation of Columbus teachers, inflation had succeeded in pushing prices up faster than wages were rising across the public and private sectors in the United States. Indeed, a Washington Post study in 1974 summarized in the CEA Voice at the time reported that grocery clerks were making an average of $12,000 based on surveys “of major cities all over the country”.  

Grocery prices had increased a staggering 21%, second only to fuel oil costs, up 20%. Increases in housing and electricity costs made the list of increases at 5.9% and 5.5%, respectively. In the last eleven months, the cost of living in the United States had risen by 12.8%, over 22% in the last two years. 

The direct result of prices rising due to inflation is that consumers spend less on goods and services. As a result, the total value of goods and services produced by the United States (Gross Domestic Product) often tends to decline in a reaction to the decreased consumer demand. If the GDP continues to shrink consistently over time, this could trigger the beginning of a recession—an economic slowdown that leads to even less consumer activity and increased unemployment rates. 

To avoid this, the federal government was trying to do everything it could to slow down the inflation that was plaguing the country. President Nixon had experimented with trying to freeze wages and prices of consumer goods from 1971-1974 with very little success. The Federal Reserve attempted to slow down inflation by raising interest rates an entire percentage point to 8% in April of 1974. The hope was that the increased cost of borrowing money and doing business within the country would slow down the economy and price increases.  

Despite the seemingly Herculean efforts of the government, inflation continued to rise. More bad news was released by the government; in July, 1974 it was announced the nation’s GDP had declined slightly from the previous quarter, stirring up fears of a recession. The next quarterly announcement about the status of the GDP by the government would have a tremendous impact on the financial outlook of the country. It was scheduled to be released in October, the same month that preparations for negotiations between the Columbus Education Association and the Board of Education were to begin.

This entry was posted on Saturday, October 20th, 2007 at 10:17 am and is filed under Voices From 1975: The Strike, CEA. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.