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The Wage Deficit Approach (WDA): using Statistics Canada's disability surveys to assess "loss of capacity" or "loss of opportunity"

According to the 2017 Canadian Survey on Disability (CSD), 22% of Canadians reported having one or more disabilities that limited them in their daily activities.¹ Of the 22% of the Canadian population with disabilities, two-fifths of them were classified as having a "mild" disability whereas one-fifth of them had a moderate, severe, or very severe disability.² Persons with disabilities are at higher risk to be unemployed or live-in poverty or have lower educational achievement levels.³

Below, we explain how Statistics Canada's disability surveys from 1991, 2001, 2006, 2012 and 2017 have been obtained and analyzed to derive wage gaps which vary by gender and severity and type of disability. These results have been published in two peer-reviewed articles:

Brown, C.L. (2023) “How the Wage Deficit Approach (WDA) can be used to Assess Economic Loss Damages based on Guidance from British Columbia case law” UBC Law Review January 2023 volume 56:1
Brown, C.L. and J.C.H. Emery (2010) “The Impact of Disability on Earnings and Labour Force Participation in Canada: Evidence from the 2001 PALS and from Canadian case law”, Journal of Legal Economics Vol. 16, no. 2, April 2010

Both articles cite case precedents in which Ms. Brown has testified (for either plaintiff or defense) and the courts have considered and adopted the wage deficit approach to determine loss of earning capacity or loss of opportunity.

Why Statistics Canada's disability surveys are helpful in interrupted earnings cases

Wage deficits estimated from econometric analysis of Statistics Canada's disability survey data offer reliable statistical support in cases where the impact of a plaintiff's impairment on earnings will occur sometime in the future but may not be explicitly manifesting itself at the date of incident (or a few years thereafter), is obscured by other factors, or is masked by fluctuations in economic activity in the plaintiff's industry sector. These wage gaps can also be useful in cases in which "loss of opportunity" or "loss of a capital asset" must be assessed based on guidance from court cases. Results of regression analysis that report wage deficits by severity and type of disability from Statistics Canada's most recent disability surveys consistently show that Canadians with disabilities earn significantly lower incomes than non-disabled persons.⁴

Below are examples in which the standard "career A" versus "career B" comparison cannot be used and instead the wage deficit approach (WDA) may produce more realistic and reasonable projections:

In cases involving children or young adults whose impairment on career or future working capacity is not yet fully known or manifesting itself (because there is no career or working capacity established yet)
In cases where the plaintiff resumed working in the same job (or type of job), is earning a similar salary to the one paid before the incident, but is fulfilling his/her job duties by virtue of an accommodating workplace or employer and/or is expected to experience future deficits (the Pallos v. Insurance Corp. of British Columbia⁵ fact situation)
In cases where the plaintiff resumed working in the same profession but is not able to work as productively, work as many clinic hours, or "bill" the same hours or fees
In cases where the plaintiff can resume working full-time, but is unable to sign up for night or weekend shifts (accompanied by "shift differential" extra pay) or overtime work
In cases where the plaintiff might have kept working, but an economic 'boom' in the plaintiff's industry (whether it be oil & gas, construction, technology, etc.) obscures the plaintiff's reduced earning capacity since the incident
In cases where the plaintiff has become less "marketable" or less "competitive" in the job market (like in situations where an incident has resulted in facial or body disfigurement)
For small business owners whose hours or productivity (or both) have impacted his/her business
In cases where the plaintiff will experience a shortened working life expectancy because of the incident, causing him/her to retire earlier than s/he would have done

The situations above have two things in common:

the impact on the with-incident career is obscured either by circumstance or changes in economic activity related to the plaintiff's occupation or industry; and/or
the impact on the with-incident career may not be observable or easily quantified at time of trial or settlement, but medical and/or vocational professionals have concluded the claimant has suffered a permanent disability, the effects of which will fully emerge over time.

Statistics Canada's Disability Surveys

At the National Conference on Disability and Work in Canada (December 4-5, 2018),⁶ an overview of the evolution of Canada's Disability Data Strategy was conducted, which commenced with Statistics Canada's 1986 and 1991 Health and Activity Limitation Surveys (HALS). After that, the 2001 and 2006 Participation and Activity Limitation Surveys (PALS)⁷ were conducted. Following the 2006 PALS, Statistics Canada conducted the Canadian Survey on Disability (CSD) in 2012 and 2017.⁸

The HALS/PALS/CSD surveys are Statistics Canada's "flagship" surveys about the impact of disability in Canada. Much of the results from these surveys have been used and quoted widely within Canada and in other countries. This is because these surveys are massive (almost 50,000 persons per sample), randomly drawn, and are associated with higher-than-average response rates.⁹

Statistics Canada's Definition of Disability

While the disability definitions used by Statistics Canada evolved from 1986 to 2017, all of them retained two key elements:

The functional limitations could arise from a physical or mental condition or health problem;
To discover the consequences of being functionally limited.

In other words, it is not sufficient to simply designate one as disabled; to qualify as "being disabled" the respondent had to indicate how the disability translated into functional limitations.

Information required from counsel/claimant to implement the wage deficit approach (WDA)

To supply a link between the plaintiff and the disabled Canadians who responded to Statistics Canada's disability surveys, we provide a questionnaire that contains excerpted questions from Statistics Canada's 2012 Canadian Survey on Disability Questionnaire and the Canadian Survey on Disability — 2017 Questionnaire (which are virtually identical). Because these questionnaires contain 385 questions spanning 92 pages, the excerpted questions we reproduce pertain strictly to investigation of the severity and type of disabilities experienced by the plaintiff.

When medical and/or vocational evidence indicates that a claimant will suffer impediments in the future, but the precise nature of such impairments is unknown (or difficult to quantify) at the time of settlement or trial, the data from the PALS and CSD surveys help us "proxy" the future impact of an injury or impairment. To utilize the wage deficit approach for a specific claimant, two steps must be completed:

Obtain medical, neuropsychological, and/or vocational evidence attesting to the claimant's impairments and that these impairments will affect his or her income or work capacity in the future; and
Have the plaintiff complete the same Statistics Canada questionnaire as filled out by 2012/2017 Canadian Survey on Disability (CSD) respondents to determine his/her level of severity and/or type of disability.¹⁰

The wage deficit approach (WDA) reflects the idea that if the trier of fact concludes that the plaintiff has and will continue to experience some of the impacts that mildly, moderately, severely or very severely disabled individuals in Canada experience, then the wage deficit approach (WDA) can quantify the plaintiff's potential income loss based on the actual experiences of working Canadians who suffer from a "mild," "moderate," "severe" or "very severe" disability. Alternatively, wage gaps based on type of disability can also be used to assess future income losses in the same way by matching one of the type categories to the claimant's health impediments.

[1] Statistics Canada, A demographic, employment and income profile of Canadians with disabilities aged 15 years and over, 2017 released Nov. 28, 2018; and Statistics Canada, Canadian Survey on Disability, 2017: Concepts and Methods Guide (November 2018) Statistics Canada catalogue no. 89-654-X2018001, p. 6.
[2] Statistics Canada's Table 13-10-0375-01 - Severity of disability for persons with disabilities aged 15 years and over, by age group and sex, Canada, provinces and territories; and Brown Economic's analysis of Statistics Canada's 2017 Canadian Survey on Disability data.
[3] As per Statistics Canada, Canadian Survey on Disability, 2017. The Daily, released Wednesday, November 28, 2018.
[4] For specific results from the last 4 survey years (2001, 2006, 2012 and 2017), see C.L. Brown (2023) How the Wage Deficit Approach (WDA) can be used to Assess Economic Loss Damages based on Guidance from British Columbia case law volume 56:1, Tables 3 and 4.
[5] 1995 CarswellBC 2, [1995] 3 WWR 728, [1995] BCWLD 179, [1995] BCJ No. 2, 100 BCLR (2d) 260, 52 ACWS (3d) 458, 53 BCAC 310, 87 WAC 310
[6] This conference was held under the auspices of the Government of Canada's Employment and Social Development Canada, division of Social Research, Employment and Social Development Canada.
[7] For more information regarding analysis of the 2001 PALS dataset, see Brown, C.L., and J.C.H. Emery, "The Impact of Disability on Earnings and Labour Force Participation in Canada: Evidence from the 2001 PALS and from Canadian Case Law" (April 2010) Journal of Legal Economics 16(2): 19-59. For results from the 2001/2006 PALS and 2012/2017 CSD datasets, as well as comparisons between the results from these disability surveys, see C.L. Brown, Damages: Estimating Pecuniary Loss (Canada Law Book, a Thomson Reuters business), December 2022 (32nd edition), chapter 5.
[8] Canadian Survey on Disability, 2012: Concepts and Methods Guide (February 2014) Statistics Canada catalogue no. 89-654-X — No. 2014001).
[9] Sources: Statistics Canada's A Profile of Disability in Canada, 2001. Catalogue no. 89-577-XIE (Ottawa: Minister of Industry, 2002), p. 6; Statistics Canada's Participation and Activity Limitation Survey 2006: Technical and Methodological Report; Catalogue no. 89-628-XIE — No. 001 (Ottawa: Minister of Industry, 2007), p. 12; Statistics Canada's Participation and Activity Limitation Survey 2006: Analytical Report. Catalogue no. 89-628-XIE - No. 002 (Ottawa: Minister of Industry, 2007), p. 8; and Canadian Survey on Disability, 2012: Concepts and Methods Guide (February 2014) Statistics Canada Catalogue no. 89-654-X - No. 2014001, at p. 22.
[10] Brown Economic Consulting has designed a plaintiff-specific questionnaire which reproduces key questions from Statistics Canada's 2012/2017 CSD surveys. It is published in Appendix 5C in C.L. Brown, Damages: Estimating Pecuniary Loss (Canada Law Book, a Thomson Reuters business), December 2022 (32nd edition) or available from us by emailing This questionnaire must be subsequently returned to Brown Economic Consulting for scoring before the results can be used.