There’s a difference between lost wages and lost earning capacity, and it’s a distinction that matters enormously in catastrophic injury cases.
Lost wages refer to the income you didn’t earn while you were recovering. Lost earning capacity is bigger. It’s the projected value of everything you would have earned over the remainder of your working life, and it accounts for the fact that your injury has permanently changed what you’re able to do. For someone in their 30s or 40s whose career is cut short by a spinal cord injury, traumatic brain injury, or amputation, that number can be substantial.
Washington law allows injury victims to recover compensation for both. But calculating future earning capacity requires more than pulling a pay stub. It requires a methodical, evidence-based analysis that holds up under scrutiny.
How the Calculation Is Built
No two earning capacity analyses look exactly the same, but they generally rely on the same core framework. Attorneys and financial professionals typically examine:
- Your earnings history, including wages, bonuses, benefits, and any self-employment income
- Your age at the time of the injury and your projected retirement age
- Your education, training, and career trajectory before the injury
- Whether you have any residual capacity to work in a different role or field
- The projected growth of your wages over time based on your industry and experience
From there, economists apply present value calculations to convert future income into a current dollar amount. This accounts for the fact that a dollar received today is worth more than a dollar received ten years from now. It’s technical work, and it’s where having the right professionals involved makes a real difference.
The Role of Vocational Experts
Lost earning capacity claims often involve two separate professionals working in tandem. A vocational rehabilitation expert assesses what kind of work, if any, you can still perform given your physical and cognitive limitations after the injury. An economist then takes that finding and calculates the wage differential between what you could have earned and what you can now realistically earn.
If a vocational expert determines you can no longer work at all, the analysis focuses entirely on your projected career earnings. If there is some residual capacity, the calculation measures the gap between your prior earning potential and your post-injury earning potential.
Under Washington’s pattern jury instructions, juries are specifically instructed to consider impairment of earning capacity as a separate category of damages from lost wages. This matters because it allows victims to recover for future losses even when they’re still able to work in some limited capacity. A Lynnwood catastrophic injury lawyer can help identify which experts are appropriate for your case and how to present their findings in a way that accurately reflects your losses.
What Can Complicate These Claims
Insurance companies don’t simply accept earning capacity calculations at face value. Defense attorneys will often challenge the methodology, argue that the plaintiff is more capable of working than claimed, or dispute the projected wage growth figures used by the plaintiff’s economist. Common points of dispute include:
- Whether the victim’s pre-injury career path was truly as lucrative as claimed
- Whether the victim made reasonable efforts to find alternative employment
- The assumptions built into long-term wage projections
- The extent to which the injury, rather than some other factor, caused the reduction in capacity
This is exactly why documentation matters from the very beginning. Employment records, tax returns, performance reviews, expert reports, and medical records all play a role in defending these numbers against challenge.
Building the Strongest Possible Case
Catastrophic injury claims that include significant earning capacity losses are high-stakes cases. The numbers are large, and the opposition will be thorough. Getting the analysis right from the start, with qualified experts and solid documentation, puts you in a far stronger position whether the case settles or goes to trial.
Deno Millikan Law Firm, PLLC has decades of experience handling serious personal injury cases in Washington. If a catastrophic injury has affected your ability to work, speaking with a Lynnwood catastrophic injury lawyer about how your earning losses can be documented and pursued is a meaningful step toward recovering what you’re actually owed.