What % unemployment is possible in the US?
By classical macro economics, around 5% is the limit in an economy based largely on industrialization and manufacturing. Our economy is not like that any longer. Information flow is more important than manufacturing, as is keeping the information reliable. This might sound simple, but consider what it takes to support the Internet backbones, running at 80 GB/sec last time I saw, which was about five years ago.
Try this: Go to a website located across an ocean. Make it the Atlantic or Pacific, it won't matter. How long did the site take to load? Do you have any idea how many hops it took to get there and back, and what were the media -- fiber optic, microwave, satellite, transoceanic cable? This stuff ain't cheap! Yet it's easy to take for granted, until a critical link goes down that is. Then businesses go out of business, unless they have planned for disaster, which most don't do.
Too expensive, you know.
Anyway, the information economy infrastructures could very well support an employment rate of 100% for citizens (those looking for work), plus an overflow percentage of foreign outsourcers. The problem comes in with wage inflation, as companies compete for high-competence information workers. That comes from classic economics and union wage inflation pressure; however, the production of high-competence information workers has tended to gain way over wage inflation.
So, the economy can handle 100% employment, but our current breed of economists can't. They're still trying to figure it out, and it doesn't help with a global economy for understanding what is going on.
It's time to write new economic text books.What constitutes "full employment"?
Full employment is when everyone who wants a job has one, and one that pays enough to meet the expenses of living. Taking a mac-job while sitting on a college degree, possibly graduate level, does not constitute employment. That's desperation.Is it possible to get the rate much under 4%?
Only if the economists believe it to be possible. I think that's a current problem with our economy. If the advisors have no faith in it to produce 100% employment without wage inflation, why should any of the business leaders?
Just ignore the numbers, eh? It simply can't happen. That's what they learned back in college, right? Which was when, 1960 or so? Maybe 1950 or even '40.
Newsflash: The world changed in 1993 when the Internet became accessible to everyone worldwide, not just Unix weenies scattered here and there feeling macho with their esoteric commands. And they said it couldn't be done.
Here we are, so pay attention. The next wave of information economic growth will make the old school economists' heads spin faster than political comments around the blogosphere.
The US unemployment rate could very well go into negative numbers, requiring nimble adjustments to the special visas for foreign employees. Remember that the last bubble was based on irresponsible investing into impossible Internet dreams. We are older and wiser now, but the real potentials have barely been scratched. It'll be harder for the shysters to get venture capital bucks to attempt anything not currently possible.
Which opens the door to consultants to let business leaders know when something might be possible. That's employment. These consultants will need support staff. More employment. Then designers get in there, coders, hardware vendors, chip fabs, network folks, plus all the support staff, and ONWARD TO INFINITY!
Um, er, 'scuse me, I get worked up.
I do think the next bubble is forming though, and this time it could become a higher plateau than the world has ever seen in its economies. I think of it as a quintessential economic revolution, way bigger in its impact than the industrial revolution, even more important than landing on the moon.
Now is not the time for backward thinking. Unfortunately, that's what we're stuck with for a time.