What is Loss of Earnings Capacity?

What is loss of earnings capacity in personal injury law?

Loss of earnings capacity refers to the reduced ability to earn income in the future because of an injury. It’s different from lost wages, which covers income you already missed due to time off work. Instead, this concept measures how the injury impacts your long-term career prospects and earning potential. Even if you can still work, your future income might be significantly lower.

• Covers future earning ability, not just past lost wages.

• Applies even if the injured person is still working.

• Focuses on career trajectory and potential income.

• Often a major component of damages in serious injury cases.

How is loss of earnings capacity calculated?

Courts and experts look at many factors, including the person’s age, skills, education, career history, and the severity of the injury. Economists may project what the person could have earned without the injury versus what they can earn now. This calculation can involve complex assumptions and expert testimony.

• Considers age, education, and career path.

• Compares pre-injury vs. post-injury earning potential.

• Often involves economic expert reports.

• Can result in substantial long-term compensation.

Why is this different from lost wages?

Lost wages are about what you’ve already missed — for example, the pay you didn’t receive while recovering. Loss of earnings capacity is about the harm to your career’s future, which can extend decades into the future. Someone may have no lost wages initially but still suffer a permanent reduction in earning potential.

• Lost wages → past income missed.

• Loss of earnings capacity → future income impact.

• Both can be claimed in the same lawsuit.

• Future losses can be much greater than past losses.

What evidence is needed to prove loss of earnings capacity?

Proving this claim often requires medical evidence about permanent limitations, employment records, and expert economic projections. Vocational experts may assess what jobs are now realistic for the injured person. The stronger the evidence, the more likely the court will award fair compensation.

• Medical reports showing permanent restrictions.

• Employment history and income records.

• Vocational expert analysis.

• Economic projections of lost future income.

Conclusion:
Loss of earnings capacity can be one of the largest parts of a personal injury claim. By focusing on long-term career harm, it ensures victims are compensated not just for today’s lost pay, but for a lifetime of diminished earning power.