economics
could we ever achieve an unemployment rate below full employment? What problems might we encounter if it did?
I'm not sure if I understand your question. To my knowledge, we can never achieve full employment in the United States. It is "an unemployment rate below full employment."
Since this is not my area of expertise, I searched Google under the key words "" to get these possible sources:
I hope this helps. If not, please respond with further questions. Thanks for asking.
To some, full employment means just that -- 100% employment or ZERO unemployment. However, economists often refer to "full employment" as something less extreme. One vein of this thinking is that, with a healthy economy, there will always be people between jobs, or just entering the labor force, etc. Another vein is that full employment is the level of employment that can "sustain" an economy.
Any attempts to have any employment greater than this full employment will only result in inflation as employers bid up wage rates to attract those few unemployed people who are between jobs.
The wikipedia link given by PsyDAG gives a very good and understandable explanation of all this.
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The problems that we may encounter if we ever achieved an unemployment rate below full employment is increasing inflation. With an increasing demand for labor, employer will bid up wage rates resulting in increased cost of production, and in turn, inflation. This will erode the real wages of workers and cause a decrease in sales and production and could lead to an economic downturn. Another problem may be the risk of creating false economic signals and distorted financial markets as investors would build portfolios of investments backed by the strong economic activities that would be expected.
