By Mustafa Bilgic · Updated 2026-06-26 · Non-attorney operator
When an injury permanently reduces what you can earn, the loss stretches across your whole remaining work life — so the law values it as the present value of future lost income. This calculator applies the same core method economists use: project the annual loss, grow it for expected raises, and discount each future year back to today's dollars. The result is a defensible ballpark, not a substitute for an expert report.
Annual earning loss = what you could have earned minus what you can still earn, per year. A discount rate higher than wage growth produces a "net discount," shrinking far-future dollars.
| Past lost wages | Lost earning capacity | |
|---|---|---|
| What it measures | Actual paychecks missed before you returned to work (or settlement) | The reduction in your ability to earn going forward |
| Proof | Pay stubs, employer letter, tax returns | Vocational expert + forensic economist + medical permanency opinion |
| Time value | Already incurred — no discounting | Future dollars discounted to present value |
| Tool | Lost Wages Calculator | This page |
The calculator sums each future year's loss after discounting it back to today:
Each year the projected loss grows by the wage-growth rate g, then is divided by the discount factor for that year. Because the discount rate is usually larger than wage growth, a dollar lost 20 years from now is worth much less than a dollar lost next year — which is exactly why a raw "annual loss × years" figure badly overstates the claim.
A 40-year-old who can no longer do physical work loses $20,000/year, has 25 years to retirement, with 2.5% wage growth and a 4.0% discount rate:
The present value (~$406,000) is what an economist would present as the lost-earning-capacity component — roughly 19% below the naive $500,000 and far below the undiscounted-with-growth figure, because the discount rate (4.0%) only slightly exceeds wage growth (2.5%). Run your own numbers above; widening that gap (a higher discount rate) lowers the result.
Because a lump sum paid today can be invested and grow. Awarding the full undiscounted future loss now would overcompensate, so courts reduce future losses to present value. The investing assumption is captured by the discount rate.
Enter the difference between what you could have earned and what you can still earn as the annual loss. Lost earning capacity measures the reduction, not your entire income.
No. For any significant claim you will want a vocational expert to define residual capacity and a forensic economist to model the loss with work-life tables. Use this estimate to understand the order of magnitude and to sanity-check expert numbers.
Sources: standard forensic-economic present-value methodology; U.S. Bureau of Labor Statistics wage and work-life data; established personal-injury damages practice for future-loss discounting. Methods and required assumptions vary by jurisdiction — verify with a licensed attorney and qualified economist.
Built and last reviewed by Mustafa Bilgic (non-attorney operator) on 2026-06-26.
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