Estimating Duration of Economic Damages in Wrongful Termination Cases: Recent Literature on Duration and Magnitude of Earnings Losses from Job Loss

How does one measure damages resulting from a job termination? Key variables are the duration during which a plaintiff would be expected to suffer reduced income following his or her termination and the amount that the income level is reduced. Zenger and Inouye (2004) reviewed the literature describing earnings losses resulting from job termination, dismissal, or displacement and summarized the findings in an effort to model economic damages in wrongful termination cases. They concluded that it is appropriate to assume a period of at least five years of sustained damages, characterized by their ‘‘triangle of damages’’ after a job termination: income falls dramatically at first and then increases over time in a pattern resembling an upside-down triangle. Their survey provides a most useful starting point in building a paradigm for estimating damages; the purpose of this note is to extend their finding to more current studies.