ECONOMIC EXPERT
QUARTERLY REPORT –By Stan V. Smith, Ph. D. with Kyle Lauterhahn
Assessing the partial loss when an injured plaintiff can still continue
to work in the future in “some reduced capacity” presents a complex challenge to plaintiff attorneys and to juries, a challenge that is often not well addressed in a litigation setting. However, there are high-quality statistics produced by the United States Census Bureau that few expert economists, and even fewer lawyers, are aware of that can greatly aid in the analysis of lost earnings capacity. These government statistics allow an economist to provide an opinion to a jury regarding the partial loss of earnings capacity due to disability to a reasonable degree of economic certainty, obviating the need in many instances for a formal vocational analysis. When an injured person returns to work, the rate of pay and the hours worked can be very misleading as they are frequently not indicative of the long-run impacts. Even if an injured person is back to work at the same job and the same rate of pay, with a disability, there are definite wage losses due to disability in the long-term future that are not readily evident and that should not be ignored. Fortunately, these Census Bureau statistics address and remedy the problem. The partial loss of earning capacity can arise not only from physical injuries, it can also arise in a myriad of situations such as defamation that has a future career impact. The loss may arise if someone’s career in medical school, for example, is prematurely terminated by wrongful dismissal. An economist can measure such loss. This article focuses on ways to help juries understand the long-term impact on earning capacity loss due to a physical or mental impairment, such as difficulty standing, or difficulty concentrating, where government statistics provide a highquality measure of the impact, both on employment probabilities and pay rates. This long-term impact is typically not evident shortly after the injury. EXAMPLES OF PARTIAL LOSS CIRCUMSTANCES After an injury, an individual may have already returned to work fulltime, but he or she may be earning less than prior to their injury due to impairment. For example, a realtor who has difficulty walking or has back pain may work full-time after the injury but accomplish less per hour.
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They may show fewer homes in a given afternoon due to difficulty walking, driving, and going up and down stairs, and thus earn less in commissions. In addition, they may also work fewer hours per week due to the disability, and earn even less per year than if they worked full-time. Furthermore, the degenerative impact of the injury on hours and earnings may increase over time. A construction worker may continue to work full-time with some pain. Even if the worker earns the same union wage per hour, he or she may work less overtime in the long run, and may be able to work only to age 53 for example, rather than perhaps age 62 or 65, or even later. The work life capacity prior to the disabling injury is forever impacted. Less overtime and fewer years of work in the future reduce the injured person’s earnings capacity. An accountant may be forced to retire early, giving up the business that took decades to build. A call center worker may choose to work less overtime due to fatigue, and he or she may take frequent personal leave as a body pain may flare up from time to time. Pain can be very debilitating. A truck driver may find that upon their return to work, pain associated with longhaul driving may force them to also accept shorter, lower-paying routes, leading to a double penalty of reduction in earnings and time worked. UNITED STATES CENSUS BUREAU DATA These long-term, future impacts of impairments are all but impossible to assess after the injury without the high-quality statistics that are available to measure them. Even if an individual has not yet returned to work, but is making medical progress and return to work is feasible, a jury will want to understand what the person can do in the future, and how their capacity may be reduced in the long run. As shown in the examples above, the average person who has a disability due to injury also has a significantly reduced probability of employment, and perhaps a significantly reduced pay rate. This reduction in employment can mean fewer years worked in one’s career (i.e. retiring early) or fewer hours worked in each year (i.e. shorter work week, more time off, etc.). The reduction in pay rate can result from reduced hourly earnings, reduced
