Loss of earning capacity

What is loss of earning capacity?

Loss of earning capacity compensates for permanent reduction in the ability to earn income, rather than for wages already missed.

The distinction from lost wages is fundamental. Lost wages address a defined past period with an actual dollar figure attached. Earning capacity addresses an entire remaining working life that has not yet unfolded.

It applies even where someone returns to their prior job and continues earning the same salary, since the injury may have foreclosed future opportunities that would otherwise have been available.

It is frequently the largest single economic component in a serious injury case, particularly for younger claimants with decades of working life remaining.

What does this actually compensate?

The category reaches beyond simple continuation of current income.

• Inability to return to a prior occupation entirely
• Reduced hours or reduced physical capacity in the same role
• Lost opportunity for promotion or career advancement
• Foreclosure of higher paying work the person was qualified to pursue
• Reduced ability to work overtime or take physically demanding assignments
• Complete inability to work in any capacity in catastrophic cases

How is it proven?

Through vocational expert testimony comparing pre-injury and post-injury earning capacity, based on the person's education, skills, work history and physical restrictions.

An economist then projects that reduced capacity across the remaining working life and reduces the total to present value, accounting for factors such as expected wage growth against an appropriate discount rate.

Medical testimony establishing the specific physical or cognitive restrictions is what grounds the vocational analysis, since the restriction must be tied to the injury rather than assumed.

Why is this claim so heavily contested?

Because it requires projecting an uncertain future. Defense experts commonly argue the person retains substantial residual earning capacity in some alternative occupation, minimizing the loss.

Self employed and commission based workers face particular difficulty, since establishing a reliable baseline income before the injury requires more than a simple pay stub.

Young claimants present a different challenge, since there may be limited work history to establish what their trajectory would have been without the injury.

Common questions

Can I claim this if I returned to my same job?

Potentially yes, if the injury forecloses future advancement, overtime capacity or alternative higher paying work you were otherwise qualified to pursue.

How is this different from lost wages?

Lost wages address income already missed during recovery. Earning capacity addresses permanent reduction in future earning ability across your remaining working years.

Do I need a vocational expert?

In most cases involving a meaningful claim for this type of damage, yes. It requires specialized analysis comparing your capacities before and after the injury.