<PAGE>
 
 
                                                                    Exhibit 11.1

                            REUNION INDUSTRIES, INC.

                       COMPUTATION OF EARNINGS PER SHARE
                        (IN THOUSANDS, EXCEPT PER DATA)

<TABLE> 
<CAPTION> 
                                              For the years ended December 31,    
                                             ---------------------------------   
                                               1998          1997        1996       
                                             ----------  ----------- ----------    
    <S>                                      <C>          <C>        <C> 
     Income (loss) from continuing                                                 
     operations                            $ (10,440)     $  (981)    $ (2,694)     
                                                                                   
     Income (loss) from discontinued                                               
     operations                                1,710          710         412     
     Extraordinary item                         (233)          --          -- 
                                             -------      -------     ------- 
     Net income (loss)                     $ (12,383)    $   (271)   $ (2,282)   
                                             =======      =======     =======      
     Weighted average common shares                                                
     outstanding                               3,881        3,855       3,855    
                                                                                   
     Net additional shares outstanding                                             
     assuming all stock options exercised                                          
     using the Treasury Stock Method (a)          --           --          --    
                                             -------       ------     -------      
     Average common shares and                                                     
     common share equivalents                                                      
     outstanding                               3,881        3,855       3,855    
                                             =======       ======     =======      
     Net income (loss) per common                                                  
     share and common share equivalent:                                            
                                                                                   
     Income (loss) from continuing                                                 
     operations                             $  (2.69)     $  (.25)   $   (.70)   
                                                                                   
     Income (loss) from discontinued                                               
     operations                                (0.44)         .18         .11      
     Extraordinary item                        (0.06)          --          --  
                                             -------       ------     -------      
     Net income (loss)                      $  (3.19)      $ (.07)   $  (.59)     
                                             =======       ======     =======       
</TABLE> 
Notes:

(a) The 1998, 1997 and 1996 computation of common share equivalents excludes
    anti-dilutive shares.