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How do you accurately measure lost earning capacity?

On Behalf of | Apr 14, 2023 | Insurance defense

Someone who has been injured may want to consider how it’s going to impact their employment and the money they can earn. This often starts by looking at their lost wages. A serious injury could keep them out of work for weeks or even months. Every missed paycheck could create problems with their monthly budget. 

But another area to consider is a lost earning capacity. This is the lost potential earnings in the future. The injury could have lasting ramifications that make it impossible for that person to earn as much money as they would have otherwise. One example of this could be someone who is employed in a physical labor job and who then suffers a spinal cord injury that leaves them paralyzed.

The trouble with determining future wages

One of the big problems with this scenario is accurately determining how much someone would have earned. How much money do they actually deserve for those wages?

Generally speaking, people will consider their previous earning history and extrapolate that over the amount of time that they are projected to work. Life expectancy may also come into play.

But even this can be controversial. For instance, imagine that the person who gets injured is in high school. They don’t have any earning history. Their parents claim that they were going to become a doctor and could have earned millions of dollars in their life. But is that true? What if they would’ve just gotten a minimum-wage job?

Additionally, maybe the person will claim that they were going to get a lot of promotions and raises. They expected to be earning far more in the future. But would they? There’s no way to know if they actually would have gotten those raises or if the earnings would have been stagnant.

A complicated process

For all of these reasons and more, it can be quite complicated to figure out exactly how to determine what is owed. Those who are involved in this process need to be sure they know exactly what legal options they have at their disposal.