Lost Wages vs Lost Earning Capacity: What’s The Difference?

Personal injury lawsuits are always tailored to our client's experiences, damages, and needs, and they almost always involve suing for lost wages, lost earning capacity, or both. 

Lost wages and lost earning capacity are two very different damage elements, and without the right personal injury lawyer on your side, permanently disabled injury victims can lose out on significant damages related to lost earning capacity.

Understanding The Difference Between Lost Wages & Lost Earning Capacity

Lost wages encompass retrospective calculations based on solid numbers, making them more manageable to quantify. Lost wages related to the actual wages or the value of work time, a person lost due to their inability to work at an existing job after an injury or in the future. For example, suppose you are in a car accident on your way to work and miss six weeks of consecutive work days, with occasional days or hours missed for injury-related appointments. In that case, lost wages are calculated by determining how many hours/days you miss due to medical appointments, injuries, related treatments, continuing physical therapy, etc., until you return to work. Even if you did not lose actual wages but rather had to use PTO (personal time off) or sick/vacation time in order to attend medical appointments, you are entitled to the value associated with this time. 

You are also entitled to claim lost wages if you require time off from your job in the future due to your injuries. This most often occurs if you need to have ongoing medical treatment or additional medical procedures after your claim has been resolved. 

If injuries are severe enough to alter your ability to work and you can no longer do the same job, you lose more than just the wages related to the past work you missed. Now, compare your future lifetime earning potential before and after the accident. This calculation is more complex and is referred to as lost earning capacity.

Lost earning capacity is a more complicated figure to determine, and the amount you receive in a settlement or judgment depends on your lawyer’s expertise and input from expert witnesses. Lost earning capacity is an amount that attempts to quantify the wages you can no longer earn because a physical or mental injury affects your earning potential permanently. 

For example, if you are a contractor who earns an average of $80,000 a year, but an accident renders you physically disabled and thus unable to work as a contractor or in a similar job, ever again, your lost earning capacity is the difference between what you would have earned had you stayed employed as a contractor and what you will now earn doing a different job, or if you are unable to work in any job, your lifetime disability earnings.

Lost Earning Capacity Is Often A Larger Damage Award

Because lost earning capacity is a prospective (or future) calculation, it is typically far more valuable than lost wages. When warranted, a skilled personal injury attorney will pursue both lost wages and lost earning capacity damages as part of your injury lawsuit.

Lost wages typically have a lower total value because they cover a temporary window. For example, in the above-referenced car accident, a contractor would miss work the day of the accident and the days he is recovering from his injuries, as well as the time needed to attend medical appointments, etc. If he can return to work and resume his regular duties, his lawyer will only pursue the past lost wages from the days or hours he missed work. If physical therapy is required in the future, the time he will miss from work in order to attend those appointments will also be considered as future lost wages to ensure he receives compensation for the time he misses from work. But for all intents and purposes, if he is able to continue working as a contractor in the same capacity as he was working before the accident, he does not have a lost earning capacity claim. 

However, if the contractor is now unable to perform his job duties as a contractor as a result of the injuries he sustained in the car accident, the contractor will either need to be retrained in order to find a job he is able to perform with his injuries, or, if his injuries are severe and permanent, remove himself from the workforce altogether. In order to calculate the damages associated with the lost earning capacity claim, an experienced personal injury lawyer will need to reach out to a variety of expert witnesses, including medical experts, vocational rehabilitation experts, functional capacity examiners, and economists, in order to obtain an accurate estimate of lifetime earning capacity losses. 

• Medical professionals will verify the extent of the injuries.
• Vocational rehabilitation experts will provide insight into the current market and average earning trends so we can calculate the lost earning potential for years into the future.
• Functional capacity examiners will test what a person is able to do physically in order to assess whether there is another job that might be a good fit for the person.
• Economists will evaluate the amount of wages the person will lose as a result of having to either be retrained and work in a different field or step away from the workforce altogether. 

Challenges To A Plaintiff’s Ability To Receive Compensation For A Loss Of Earning Capacity

If you have worked steadily throughout your life and earned consistently more each year, lost earning capacity seems more predictable to a jury because there is a steady income line to follow, making it easier to project into the future.

However, calculating lost earning capacity wages can be more challenging to assess in some instances. For example:

• A minor or young adult who does not yet have a predictable earning record and for whom there is no way to guarantee what career they will pursue in the future.
• A stay-at-home parent who worked in the past and planned to work again in the future but is currently unemployed.
• Someone who is currently unemployed.
• Individuals with a high turnover rate in job positions or without steady or predictable wage earnings.
• A highly proficient amateur athlete who plans to turn pro.
• Seasonal or migrant workers.
• Etc.

These situations require diligent advocacy by the personal injury attorney to ensure the injured party is awarded the compensation they deserve after suffering a life-altering injury.

While a competent personal injury lawyer is always a priority for anyone planning to sue for lost earning capacity, it is critical if your injury will result in a loss of earning capacity. 

Burneikis Law Will Fight To Ensure You Receive The Maximum Amount Of Compensation For Your Lost Wages & Lost Earning Capacity

The team at Burneikis Law works diligently to ensure our clients receive maximum compensation for lost wages or lost earning capacity after a life-altering injury. We never let insurance companies or their penny-pinching agenda get in the way of what our clients rightly deserve.

Contact us to schedule a consultation and learn more about your rights regarding lost wages and earning capacity.