Lost earnings analysis applied to personal injury litigation: methodology, deliverables, and case-specific considerations.
In a personal injury matter the lost earnings analysis is the core of the economic claim and often its largest component. The economist establishes the but-for earnings base from tax returns, wage statements, and personnel records, projects it over a worklife expectancy with wage growth, and compares it with the post-injury path drawn from actual earnings and the work-capacity opinions in the record. A short absence with a full return to the same job leaves a past loss that can be built from pay records; a permanent restriction that ends the prior occupation opens a future gap that runs across the remaining worklife and is discounted to present value with the rate stated.
Past and future lost earnings and fringe benefits for a person whose injury has removed them from work or reduced what they can earn. The analysis builds from the earnings history, projects the but-for path over the person's expected worklife with wage growth, and discounts the future stream to present value. When the person can still work in a reduced capacity, the loss is framed as diminished earning capacity, with the post-injury path drawn from a vocational opinion or the treating record and offset against the but-for projection.
The claim typically consists of past lost earnings from the date of injury to the date of analysis, future lost earnings or reduced earning capacity across the person's expected worklife, lost fringe benefits such as employer retirement contributions and health insurance, the replacement cost of household services the person can no longer perform, and the present value of future medical and care costs when a life care plan or treating recommendations exist. The records that drive the number are tax returns, W-2s and pay stubs, personnel and union files, benefit plan documents, and the medical or work-capacity opinions that define what the person can do after the injury.
We issue the final report in disclosure-ready form and provide deposition and trial testimony, rebuttal of opposing economic opinions, and updated calculations as new records arrive.
When the loss runs past the date of analysis. Past lost pay for a documented absence can be presented from the records, but any future component, whether reduced hours, a lower-paying job, lost advancement, or a shortened worklife, requires a projection with growth and discounting, and the assumptions behind it should be stated by someone who can testify to them.
From what the person has actually earned since returning to work and from the work-capacity opinions of the treating providers and any retained experts. The economist does not decide what work the person can do; the economist prices the consequences of the opinions in the record and shows the loss under each opinion when they differ.
Request a consultation on Lost Earnings or call (201) 343-0700. Plaintiff and defense counsel.