Accident injuries often impair the ability to work. Injury victims are entitled to recover the wages the lose before the injury heals and they resume their employment. When the injury is permanent, victims can recover their loss of future wages. In most cases, however, personal injury lawyers will ask the jury to award damages for the victim’s loss of earning capacity.
Predicting Lost Wages Is Difficult
The law defines lost wages as the future wages an injury victim would have earned if the victim had not been injured. Suppose, for example, that a roofer worked for an employer that paid a wage of $20 per hour and contributed to a 401(k) plan. After sustaining a bad knee injury in a car accident, the roofer can no longer climb a ladder. The roofer takes a job as a construction laborer because it is the best job he can find. The job pays $15 an hour and offers no retirement benefits. The car accident has clearly caused a loss of future income.
Measuring that loss is not as easy as it might seem. If the injury victim is 35 years old, he might have worked another 30 years if he remained in good health. Ignoring overtime hours, he might have worked 50 weeks or 2,000 hours a year. That’s 60,000 hours of work until retirement. If the car accident causes the injury victim to lose $5 an hour, the accident might cause a $300,000 loss of future wages, in addition to the lost value of the employer’s contribution to the victim’s 401(k) plan.
While the calculation seems simple, it is open to question. Initially, the $300,000 loss must be reduced to present value. That concept recognizes that the victim will not receive an award of damages spread out over the next 30 years. The jury will award a lump sum of money. The “present value” of future damages is the amount that must be invested today to equal a $300,000 payment spread out over 30 years. An economist can make that calculation after estimating investment returns and the impact of inflation.
Other questions cast more uncertainty on the total damages that should be awarded for future wage loss. Is a roofer likely to retire at an earlier age than a construction laborer? A labor economist might testify that roofing is more dangerous — and more likely to lead to early retirement — than work as a general laborer. Maybe the victim’s loss of hourly income will be partially offset by the victim’s ability to work longer for a lower wage.
The victim might also become dissatisfied with a laborer’s wages and might learn new skills. The victim might eventually transition from employment as a laborer to employment as a carpenter, a job that pays as much as the victim earned as a roofer. Or the victim might be promoted to the position of construction foreman and earn more than the victim made as a roofer.
Nobody has a crystal ball that accurately predicts the future. The reality is that nobody can say for sure how much income the roofer will lose. Yet the law in most states classifies the loss of future income as “special damages” and requires that they be proved with “reasonable certainty.” That standard makes it difficult to prove future wage loss in most cases.
In some cases, predicting future wage loss is nearly impossible. A 20-year-old in her second year of college who hasn’t chosen a major and whose only work history is selling ice cream during the summer might choose among any number of occupations that pay a wide range of incomes. She might change jobs three or four times before settling into a career. If the student is totally disabled in an accident, predicting the career the student would have pursued and her corresponding wage loss is often inconsistent with a standard that requires proof to a reasonable certainty.
Projecting Lost Earning Capacity
In recent decades, most states — including Florida — have recognized that victims will probably receive inadequate compensation for future wage loss if they are required to prove their lost wages. Most courts now recognize that accident victims should instead recover the value of their lost earning capacity.
Lost earning capacity focuses on potential earnings rather than actual earnings. Courts characterize lost earning capacity as “general damages” rather than “special damages.” General damages do not need to be proved to a reasonable certainty. General damages can be inferred from the nature of the injury. While a jury must base general damages on the evidence, the jury is not required to calculate the damages with precision.
When the evidence suggests that an injury will impair an accident victim’s ability to work, lawyers often retain vocational experts to explain the victim’s loss of earning capacity to the jury. Vocational experts evaluate the victim’s work history, examine the medical records and the result of functional capacity assessments, and determine whether the physical or mental limitations that resulted from the accident will prevent the victim from engaging in former employment.
Vocational experts also determine what kind of work the victim can perform in light of the limitations revealed by medical records. Vocational experts use standard references that describe the physical abilities required to perform various occupations. They use the victim’s educational records, training, and work history to decide what kind of work the victim is qualified to perform. Based on that information, a vocational expert can determine a range of jobs that the victim might be able to find and the incomes the victim might be expected to earn.
Based on that analysis, an economist can compare the loss of potential future earnings to the income the employee would have earned in the occupation the victim was pursuing at the time of the accident. By projecting the loss over the course of the victim’s worklife and discounting it to present value, the economist can suggest a value or a range of values that reflect loss of future earnings.
When a victim with no work history is injured, a vocational expert will survey the labor market and determine the kinds of jobs the injury victim will be capable of performing. Based on the victim’s goals, intellectual ability, and educational plans, a vocational expert can project the range of future employment options that are realistic in light of the victim’s injuries. An economist will then use that information to suggest a range of damages that can be assessed for loss of future earnings.