In Michigan, unemployment benefits range from $81 to $362 per week, while in Colorado, benefits range from $25 to $502 per week, and in Washington, these benefits can vary between $158 and $664 per week. Notice that these differences alone would imply more than a $15,000 annual difference in benefits depending on your state.
Program Specifics:
The amount of benefits one receives under each of these programs varies depending on one’s individual earnings prior to becoming unemployed. However, I am asking you to assume (for simplicity) that we are looking at workers in each of the three states who qualify for the maximum benefit ($362 per week in Michigan, $502 per week in Colorado and $664 per week in Washington).
In addition to differences in the monetary benefits, each of these states also have different methodologies for phasing these benefits out as workers find employment:
Scenario 1: -In Michigan, your benefit reduction depends on how much you earn relative to your unemployment benefit. If you earn less than your weekly benefit ($362 per week as outlined above), your benefit is reduced by ½ of your earnings. If you earn an amount greater than or equal to your benefit ($362 per week), but not exceeding 1.5 times your benefit ($543 per week), you received 1.5 x your benefit minus all of your earned income. If you earn more than 1.5 times your benefit, you no longer quality for the program.
Scenario 2: -In Colorado, you can earn up to 25% of your unemployment benefit in earned income without any reduction in your benefit. However, for each dollar beyond this limit you earn, your benefit is reduced by one dollar.
Scenario 3: -In Washington, the state takes the benefit recipient’s earned income, subtracts $5 and multiplies this amount by .75 (with this number rounded up, to the next highest dollar). This is then the amount that is deducted from the worker’s unemployment benefit. o For example, if a worker qualifying for the $664 per week as described above found a job earning $200 per week, their benefit would be reduced by $147, leaving them with $717 per week ($664 in benefits + $200 in earnings – [(2005)x.75]).
Draw 3 labor leisure diagrams, one for each of the three states above, given the scenarios?