Earning capacity loss is not a simple calculation. Economic damages or the ability to earn an income are a focus of attention when a person has become injured, disabled, or killed. Earnings and economic viability are also a focus of attention in spousal support matters.
The Magnitude of Earnings Capacity Loss
The difference in what a person might have made over the course of his or her lifetime absent severe injury or wrongful death can be astronomical. While a surgeon completing residency may not be earning a high salary at the time of sustaining a traumatic brain injury, the surgeon’s expected income may have increased multiple times in a short time period. Additionally, a surgeon in Houston or Dallas may have a different earning capacity than one in a small rural town in Illinois.
As an earnings capacity loss expert, Dr. Manges’ role is to consult with legal counsel to learn as much as possible about the educational and current job of the victim, and to provide a comprehensive opinion, based on actuarial, statistical, vocational, and other information, about the earning capacity loss likely to be suffered by the victim following the injury or death.
Understanding Earnings Capacity Terms and Concepts
Earning capacity is sometimes confused with actual earnings and expected earnings. Actual earnings is what a person actually earns (gross wages) at the time of injury. Expected earnings is what the person would be expected to earn over his or her career, based upon past actual earnings and certain assumptions that are likely to occur, which might consist of normal increases in pay for people in a similar profession or occupation.
Earning capacity equals what a person can be expected to earn when they maximize the expectation of their actual earnings. Following a significant brain injury, the earnings capacity of a young surgeon may decrease from potentially millions of dollars, to perhaps an amount reflected by a minimum wage job if such a job is all that the surgeon could do following an accident.
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As a result, a person’s actual earnings, expected earnings and earning capacity are positively or negatively affected by what a person is physically and/or mentally able and willing to do for a given wage rate. If a person has been injured and cannot return to their former work and are offered alternative work but at a lesser wage, they may choose not to take the offer. Their actual past earnings may be a basis for future damages.
How We Assist Legal Counsel in Matters Concerning Decreased Earnings Capacity
Because of the potential damages that are often at stake in litigation concerning earnings capacity, it is critical to have a leading expert develop a comprehensive report and opinion concerning the future earning capacity of the subject individual.
Dr. Manges has been involved in numerous cases in which earnings loss (or loss of earnings capacity) was a significant part of a case. He assists legal counsel in assessing decreased earnings capacity during the pre-trial stages, and also provides expert testimony at trial regarding earnings capacity matters. With a national practice, Dr. Manges is available for consultation in states ranging from Florida to California, with a particular focus on Texas (including Dallas and Houston), Illinois, and New York. For a consultation on your case, please contact Dr. Manges and Associates.