When you are lying in a hospital bed, or sitting at home recovering from a crash, the financial stress hits you almost as hard as the physical pain. You watch the days on the calendar tick by, knowing that every day you are not at work is a day you are not getting paid.
Most people understand the concept of lost wages. It is simple math. You missed three weeks of work. You earn $1,000 a week. Therefore, you are owed $3,000.
But for those who have suffered a serious or permanent injury, lost wages are only the tip of the iceberg.
The real financial threat isn’t the money you lost last month. It is the money you will now be unable to earn next year, five years from now, or for the rest of your career. In Texas personal injury law, this is called loss of earning capacity.
It is a completely different legal concept from lost wages, and it is often worth significantly more. However, because it is harder to calculate, insurance companies can tend to ignore it.
The Difference Between What You Earned and What You Could Have Earned
To understand why this matters, you must look at the difference between the past and the future.
Lost wages refer strictly to the past. It is the actual income you missed from the date of the accident until the date you settle or go to trial. For salaried or hourly employees, this can be more straightforward. We look at your pay stubs, your timecards, and your W-2s. It is a reimbursement for money that should already be in your bank account. For people who work on commission, business owners, and other variable income earners, it can be more difficult. This often requires us looking at historical data, evidence of missed opportunities, etc.
Loss of earning capacity is about your potential. It compensates you for the reduction in your ability to earn a living in the future due to your injury.
This distinction is critical because your “capacity” to earn might be much higher than your current paycheck.
The Young Professional:
Imagine a 25-year-old apprentice electrician who is injured and can no longer lift heavy tools. At the time of the crash, they were making an apprentice’s wage. But their capacity was to become a master electrician earning six figures. An insurance company only considering apprentice wages would be significantly undervaluing them out of their lifetime career value.
The Commission Worker:
If you work in sales, your income fluctuates. A long recovery period might mean you miss the critical window to close a major deal or build a client base that would have paid off years down the road.
The Career Pivot:
Some of our clients are forced to switch careers entirely. If a surgeon suffers a hand injury, they may have to switch practice areas or even careers. They can still work, but their earning capacity has dropped significantly. The difference between those two incomes—multiplied over the rest of their career—is the loss of earning capacity.
Why Insurance Companies Fight Earning Capacity Claims
Insurance adjusters may fight these claims because they are expensive. It is cheap to pay you for two weeks of missed work. It is very expensive to pay you for 20 years of reduced income.
One tactic an insurance company may use is to argue that your loss is “speculative.” They might say, “Who knows if you really would have gotten that promotion?” or “Maybe you would have quit that job anyway.”
They will also argue that because you can still work some job, you haven’t lost anything. They will point to a sedentary job you could theoretically do, even if it pays half of what you used to make, and claim you are “employable.”
This is why we do not rely on guesswork. In Texas, the law requires us to prove these damages with “reasonable probability.” We do not just tell the jury you lost money; we build a mathematical and vocational model to prove it.
How We Prove Your Career Value Without Guessing
Since we cannot predict the future, we rely on data. Proving loss of earning capacity requires a team of professionals who analyze your life from every angle. We do not use generic calculators, instead we build a custom profile of your career trajectory.
1.The Vocational Expert
We often work with a vocational expert who assesses your “employability” before and after the crash. They do not just look at your job title; they look at your transferable skills. They will interview you to understand your education, your training, and your physical limitations. Then, they perform a labor market survey to see what jobs are available to someone with your specific restrictions in your specific city. If the only jobs you can do now pay $15 an hour, and you used to make $35 an hour, that specialist provides the hard data to prove the gap. They will also look at how your career longevity may have been affected. If you will no longer be able to work as long, then that is an additional area affecting your earning capacity.
2.The Forensic Economist
Once we know the gap in your hourly or yearly potential, we hand that data to a financial planner or economist. They calculate the long-term math. They factor in inflation, the average rate of raises in your industry, and the value of lost benefits like 401(k) matching or health insurance. Often, we find that a loss that looks like $10,000 a year is actually a loss of $500,000 over a lifetime when compound interest and inflation are included.
3.The Functional Capacity Evaluation (FCE)
This is a physical test where a doctor or therapist measures exactly what you can and cannot do. Can you lift 50 pounds? Can you sit for four hours without pain? Can you type? This report is the physical proof that connects your medical injury to your inability to work. It prevents the insurance company from arguing that you are “faking it” to get out of work.
Protecting Your Financial Future
Protecting Your Financial Future
When we calculate Loss of Earning Capacity, we are not trying to get “extra” money. We are trying to replace exactly what was taken from you. We are ensuring that your family’s financial security remains intact, even if your career path has been forced to change.
At Snellings Injury Law, we understand that a serious injury affects every hour of your day, including the hours you spend at work. We dig deep into the financials to ensure that when you settle your case, you aren’t just paid for the weeks you missed, but for the future you earned.
If you’ve been injured due to the negligence of someone else, schedule a free strategy session with Snellings Injury Law. We will help you figure out your next steps, and whether you need an attorney.
