What is Lost Earning Capacity?
Updated January 24, 2026
Compensation for the reduction in ability to earn income in the future due to injuries, even if the person is still working.
Understanding Lost Earning Capacity
Unlike lost wages (past income), lost earning capacity addresses future income potential. It applies when injuries limit career options, require job changes, or reduce work capacity. Economic experts calculate these damages based on work-life expectancy and earnings projections.
Examples
- 1Surgeon unable to perform surgery after hand injury
- 2Construction worker limited to desk jobs
- 3Young worker with permanent disability
Related Terms
Lost Wages
Income that an injured person loses because they are unable to work due to their injuries, including salary, hourly wages, bonuses, and other employment benefits.
Loss of Consortium
A claim by the spouse or family member of an injured person for the loss of companionship, affection, comfort, and sexual relations resulting from the injury.
Punitive Damages
Additional damages awarded beyond compensatory damages to punish the defendant for particularly egregious conduct and deter similar behavior in the future.
Diminished Value
The reduction in a vehicle's market value after it has been damaged in an accident and repaired, compared to a similar vehicle that was never damaged.
Pain and Suffering
A category of non-economic damages compensating injury victims for physical pain, emotional distress, and diminished quality of life caused by their injuries.
For Personal Injury cases
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