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Nathaniel Fick
Nathaniel Fick
Attorney • (410) 321-6000

Lost Income or Lost Earning Capacity – What’s the Difference?

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When someone suffers an injury due to someone else’s negligence or wrongful act, they are sometimes unable to work immediately after the accident, resulting in a loss of income. But if their injury renders them unable to return to work at all, or unable to perform the type of work they used to, they might be able to make a claim for lost earning capacity.

Two Different Claims

Lost income and lost earning capacity are two different things: lost income refers to actual income lost, while lost earning capacity, also known as future loss of earnings or impairment of earning power, represents the amount an injured person could have earned had they not been injured.

In general, lost income is much easier to prove than lost earning capacity. Lost income is calculated based upon the actual amount of income lost as reflected in employment records, while future earning capacity awards are based on lost earning power, and are left to the discretion of a jury.

Calculating Lost Earning Capacity

Lost earning capacity calculations often vary according to region, as different geographic areas have different standards of living. Lost earning capacity is typically determined through complex calculations involving:

  • The injured person’s work profile, including their skills, talents, abilities, and experience.
  • The opinion of an expert medical witness, who conducted an extensive review to determine the extent of the injury and how it will likely affect future work performance.
  • A determination of future income lost using current market values and wage rates.

Person injuries often lead to major changes in life, particularly in regard to an individual’s ability to earn a living. If you have sustained a personal injury that has affected your work status, consult with an experienced personal injury attorney to find out whether you might have a claim for lost earning capacity.