Lost wages cover pay you have already missed. Lost earning capacity covers what the injury takes from the rest of your working life. They are proved differently, and the second is routinely the larger and the more often under-claimed.
Lost wages: a documented, backward-looking figure
This is arithmetic. Days or shifts missed, multiplied by the rate, supported by pay stubs, an employer letter and tax records. It properly includes overtime you would have worked, missed bonuses and commissions, and the value of used sick or vacation days — those were an asset you spent because of the injury.
Self-employment is harder, because income fluctuates. Proof usually means several years of returns and business records to establish a trend the injury interrupted.
Lost earning capacity: forward-looking and expert-driven
This asks what the person could have earned over their working life before the injury, against what they can realistically earn now. Importantly it measures capacity, not actual earnings — someone who returns to the same salary through determination or an accommodating employer may still have a claim, because their ability to compete in the open labour market has narrowed.
It generally requires two experts. A vocational rehabilitation expert assesses what work the person can still do given the medical restrictions, their education and their history. A forensic economist converts that opinion into money: expected earnings path, work-life expectancy, fringe benefits and pension effects, then a reduction to present value.
Where the argument happens
- The baseline — would promotions have come? A young worker with a short history is hardest to project.
- Residual capacity — the defence usually argues more remaining ability, often supported by labour-market survey evidence.
- Work-life expectancy — when would this person have retired anyway?
- Mitigation — did the claimant make reasonable efforts to retrain or return?
- Present value — the same discount-rate fight as in future medical costs.
Household and unpaid work counts too
Someone who does not work for pay can still have a substantial economic claim. The lost ability to perform childcare, housekeeping and household maintenance is valued by replacement cost — what it costs to hire that work done. Overlooking this is one of the most common ways a claim is under-valued.
Both categories sit on the economic side of the ledger, which matters because that half is usually left uncapped: see economic vs non-economic damages and state damage caps. Related: Economic.
General information only, not legal, tax or financial advice.