When is a new designer truly ready for the industry?

When they learn to think logically, parse game mechanics, see the big picture, and realize that in reality they don't know anything.

Pragmatically, you are ready when your portfolio is good enough to get you past the resume screening process and you can pass an interview.

The biggest challenge I see "newb" designers face is the reality that their "great ideas" and "absolute truths" are respectively flawed and absolute only for a tiny sub-set of scenarios. I guess that's the biggest challenge with fresh blood in any discipline: the arrogance of youth. =)

-me

It's not something that can be easily answered since every studio looks for something different. Really, you have to have designed something, which isn't the same as having written a design document or two. Better to have worked with something from conception to realisation, adding and removing features as required, noting and describing key mechanics, and being able to critically appraise one's own work.