How Do You Calculate Loss of Future Earnings?

“Loss of future earnings” is an economic damage that refers to the loss of the injured party’s (plaintiff’s) ability to earn income because of an injury or illness. The Georgia courts, as is the case in most states, permit plaintiffs to seek recovery for lost future earnings. If a plaintiff can prove that a reasonable value for this loss exists, with or without a prior work history, the courts will award the plaintiff with an amount that quantifies the loss. The amount awarded will vary depending upon the nature of the injury, prospective earnings, and plaintiff’s life expectancy.

Lost Wages vs. Loss of Future Earnings

The damage category of “wages” can refer to several different specific damages. Understanding the nuances between the categories of lost wages can help you learn which types you might be eligible to receive in a personal injury claim. The phrase “lost wages” generally refers to income the plaintiff actually lost because of injuries and recovery time. The courts will calculate lost wages by examining the plaintiff’s past paychecks and calculating how much he or she would have made were it not for the injury and required recovery time.
Lost capacity to earn, or loss of future earnings, refers to the loss of the same living the plaintiff would likely have earned were it not for a serious or life-changing injury. If a plaintiff suffers a debilitating injury, such as brain damage or paralysis, he or she might not be able to return to work at the same job he or she held prior to the accident. The “lost capacity to earn” damage compensates the plaintiff for the difference between the job he or she did hold and the jobs he or she can now hold with the injury or disability.
When a catastrophic or long-lasting injury permanently affects the victim’s ability to earn, the victim can seek recovery for the wages he or she could have earned for the duration of the person’s working life. Note that this is different from what the individual would have earned at his or her previous job. Loss of future earnings can encompass all jobs and promotions the individual could have earned in his or her lifetime. As you can see, this damage award can reach into the millions, depending on the person’s specifications and life expectancy. It’s possible to seek recovery for both lost wages and loss of future earnings in the same lawsuit.

Calculating Loss of Future Earnings

The U.S. Supreme Court has ruled in the past that a tort victim seeking damages for permanent injuries may base his or her recovery on the “prospective earnings for the balance of his/her life expectancy at the time of injury.” The plaintiff can seek recovery for life expectancy without diminishing it due to the nature of the injuries. It is up to the plaintiff’s attorney to calculate a reasonable amount of lost capacity to earn and to seek this amount of recovery from the defendant. It is the judge, however, who will come up with the final judgment amount.
Placing a dollar amount on an injured person’s lost capacity to earn is no easy task. The courts in Georgia will rely upon expert testimony, financial documentation, a comprehensive assessment of the plaintiff’s prognosis, and many other factors to determine how much the plaintiff reasonably could have earned in his or her lifetime. It is up to the plaintiff’s attorney to pursue maximum compensation while still presenting a realistic picture of the plaintiff’s limitations and earning capabilities at the point of maximum recovery.
The courts might review the plaintiff’s work history, skills, education, talents, certifications, abilities, and experience to calculate lost capacity to earn. An expert medical witness to testify on the limitations of the injury can also paint a clearer picture of the victim’s future earning capabilities. Finally, the current market and wage rates can determine how much the plaintiff could have earned were it not for the disabling injury. Oftentimes the skill of the plaintiff’s attorney can determine how large or small the damages are for loss of future earnings.