An accident can change your life in ways you never expected. When a serious injury limits your ability to work, or prevents you from working at all, you may be entitled to compensation for loss of earning capacity. Unlike lost wages, which reflect income you already missed, this type of damage focuses on your future and your diminished ability to earn over time.
At Tawney, Acosta & Chaparro P.C., we fight for injury victims in Texas and New Mexico who face long-term professional setbacks because of someone else’s negligence. This guide explains what loss of earning capacity means, how it’s calculated, how to prove it, and how it differs from other types of financial losses.
For immediate assistance, please contact us online or call (575) 222-1000 today. We offer free, no-obligation consultations.
What Is Loss of Earning Capacity?
Loss of earning capacity refers to a diminution in your ability to earn income in the future due to a long-term or permanent injury. This is distinct from lost wages, which are tied to income you missed during a recovery period.
For example, a construction worker who suffers a spinal injury may eventually return to work but can no longer perform physical labor. If they move into a lower-paying position, they have experienced diminished earning capacity, even though they’re still employed.
Other common terms for this loss include:
- Lost earning capacity,
- Diminished earning capacity, and
- Loss of potential income.
This loss may be part of a personal injury claim in both Texas and New Mexico.
Examples of Loss of Earning Capacity
Loss of earning capacity can affect people in all professions, not just those who perform physical labor. You don’t need to be completely disabled to recover compensation.
Here are a few examples:
- A teacher develops a neurological condition that affects speech and must switch to an administrative role with lower pay;
- A warehouse worker suffers a torn rotator cuff and can no longer lift heavy boxes;
- A commercial truck driver loses their CDL after a traumatic brain injury and takes a lower-paying desk job; and
- A young apprentice mechanic is seriously injured and never completes training, limiting career growth.
In each case, the injured individual can still work, but their future earnings have been reduced, and that loss may be compensable.
Calculating Compensation for Loss of Future Earnings: What You Need to Know
Calculating compensation for loss of future earnings requires looking ahead. The goal is to estimate what you would have earned had the injury never occurred and compare it to what you are now likely to earn.
Several factors are typically considered:
- Age at the time of injury;
- Occupation and career trajectory;
- Education, training, and skills;
- Injury severity and long-term limitations;
- Wages in your profession and geographic area;
- Ability to perform alternate or light-duty work; and
- Expected raises, promotions, or advancements.
While each case is unique and will vary based on the above factors, generally, the loss of earning capacity formula is:
(Projected income before injury) – (Projected income after injury) = Loss of earning capacity
This calculation may be adjusted to account for inflation, life expectancy, taxes, and other economic factors. Vocational and economic experts often offer projections and provide expert testimony.
How Do You Prove Loss of Earning Capacity?
Because these damages are based on projected future earnings, proving loss of earning capacity can be more complicated than proving lost wages. It requires showing that your injury permanently or significantly limits your ability to work.
You may need the following:
- Medical records—to demonstrate the nature and extent of your physical or cognitive impairments;
- Expert medical opinions—to connect your limitations to the injury sustained;
- Vocational assessments—to evaluate your skillset, career potential, and post-injury job options;
- Economic analysis—to compare pre- and post-injury earning potential using real-world data; and
- Work history and performance reviews—to support your career trajectory prior to the injury.
At Tawney, Acosta & Chaparro P.C., we work with forensic economists, life care planners, and other experts to build strong, fact-based arguments that help maximize your claim.
Texas vs. New Mexico: Differences in Legal Treatment
Texas and New Mexico allow injured plaintiffs to recover for loss of future earning capacity, but the legal standards and how courts evaluate these claims can vary slightly.
Texas
In Texas, courts distinguish between lost wages and loss of earning capacity. While exact dollar amounts are not required, you must present reasonable evidence of reduced ability to earn income. Texas allows jury discretion in determining the claim’s value, and you may still recover even if you are currently working in a different job.
New Mexico
New Mexico courts require a “reasonable certainty” level of proof.
Jurors evaluate both the past and projected future income and consider factors such as:
- Age, education, and training;
- The permanence of the injury; and
- How the injury impacts potential job opportunities.
In both states, the support of experienced attorneys and credible expert witnesses can make or break your claim.
Suing for Loss of Potential Income
Suing for loss of potential income is an important part of recovering from a catastrophic or disabling injury.
It is often included as part of a larger personal injury case, where you may be entitled to recover for:
- Loss of earning capacity,
- Lost wages,
- Future medical expenses,
- Pain and suffering, and
- Loss of enjoyment of life.
Even if you can return to work, if your injury has affected your long-term career goals or limited your options, that diminished earning capacity is a real loss that deserves full consideration.
Why You Need an Attorney for a Diminished Earning Capacity Claim
Loss of earning capacity is one of the most disputed elements of a personal injury case.
Insurance companies often argue:
- You are exaggerating your limitations,
- You can return to your prior job,
- You’ve already found comparable work, or
- Your career would not have progressed significantly anyway.
At Tawney, Acosta & Chaparro P.C., we build compelling evidence to challenge those arguments. We understand how to calculate losses, secure expert testimony, and present your claim in a way that juries and insurance adjusters respect.
Our firm has helped clients from Las Cruces to El Paso recover fair compensation for serious, life-changing injuries. We don’t back down from complex claims or let insurance companies underestimate your future.
Contact Tawney, Acosta & Chaparro P.C. Today
If you or a loved one has suffered an injury that affects your ability to earn a living, you may have a valid claim for loss of earning capacity. Our experienced attorneys in Texas and New Mexico can help you understand your options and fight for the financial recovery you deserve.
Fill out our online form or call (575) 222-1000 today for a free consultation. We’ll evaluate your case, explain your rights, and work to secure the compensation needed to support your future.
Alejandro Acosta
Mr. Acosta is a lifelong resident of El Paso. He graduated from Cathedral High School in 2000 and graduated from St. Mary’s University in San Antonio in 2004. Mr. Acosta went on to attend Sandra Day O’ Connor College of Law (Arizona State Law School). He graduated in 2008, receiving his J.D. and his Indian Legal Certificate for his work in Indian Law and dealings with various tribal nations throughout Arizona. Alejandro has been licensed to practice law in Texas since 2008 and has been licensed in the State of New Mexico since 2011.
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