Determining growth rates to project earnings and benefits

Once non-incident earnings and benefits have been determined, the next step is to project the damages into the future. In personal injury cases, if they are expected to recover at some point in the future, then their earnings and benefits should be projected through that expected time of full recovery. In wrongful death cases or in personal injury cases in which they will never make a full recovery, their anticipated losses will stretch throughout their life.

Usually, the longer someone works, the more they earn. Projecting future losses of earnings and benefits accounts for these increases. Generally, a growth rate is applied to account for these expected increases. In some cases, the individual’s own earnings may indicate a growth rate. However, some caution is warranted as there may only be a small sample of data from which to determine a historical growth rate.

The most common method for determining future earnings and benefits is the application of a growth rate based on historical increases within an occupation, industry, or education level. Bureau of Labor Statistics data is a commonly utilized source. Here is a list of online data resources to use.

Of course, there may be circumstances where future growth is predetermined. If the person was a government or union employee at the time of their injury or death, there may be pay schedules that detail specifically what earnings they would have received over time. Pay schedules are commonly based on the individual’s ‘step’, ‘grade’ and/or ‘longevity’ with the employer, and are generally set for a few years into the future. These pay schedules should be applied first into a projection of earnings had the individual not become injured or died. For years beyond the pay schedules, the projected future growth may then be based on average growth rates or by determining the historical growth rate of the pay schedules.

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