Damages and Valuation
Injury Damages
Loss of earning capacity measures diminished future earning ability rather than actual past income loss. It compares what the plaintiff could have earned but for the injury against what they can earn now.
Proof typically combines a vocational expert assessing residual work capacity with an economist projecting the earnings differential across the work-life expectancy and reducing it to present value.
Alternative Names:
Diminished Earning Capacity, Impaired Earning Capacity
Why it Matters?
This claim can be substantial even where the plaintiff has returned to work, since the measure is capacity rather than actual earnings. It is also assumption-heavy, resting on work-life expectancy, career trajectory, and wage growth projections that are frequently optimistic. Effective defense targets the vocational foundation rather than the arithmetic, because an economist's calculation is only as sound as the capacity assessment it rests on.
Frequently Confused with
Related terms
Frequently asked questions
Can a plaintiff recover if they returned to the same job at the same pay?
What is work-life expectancy?
