How is loss of earning capacity calculated in the US?
The standard method: establish pre-injury expected earnings, subtract post-injury residual earning capacity, multiply the annual differential across your work-life expectancy, then discount to present value. A forensic economist applies work-life tables, wage growth, and a discount rate; the net figure is often reduced for labor-market contingencies.
What discount rate is used in US earning capacity claims?
Unlike Canada, most US states do not mandate a rate. Forensic economists commonly use a real (inflation-adjusted) discount rate of 1-3%, or apply the 'total offset' method where wage growth is assumed to offset the discount rate. The choice materially affects the award and is often contested.
What is work-life expectancy?
Work-life expectancy is the number of years a person is expected to remain in the labor force, accounting for periods of unemployment and withdrawal — it is shorter than the time to retirement age. US economists rely on Bureau of Labor Statistics work-life tables segmented by age, sex, and education.
Can I recover lost earning capacity if I return to my old job?
Potentially yes. Earning capacity measures the impairment to your ability to earn, not just actual lost wages. If your injury limits future promotions, overtime, physically demanding work, or makes you more vulnerable to layoffs, you may have a diminished-capacity claim even at the same current salary.