The gender pay gap and the gender income gap are two different phenomena that often get mixed up. That’s a shame because fixing one requires different solutions than fixing the other.

The Gender Pay Gap: Different dollars for same work = Gender pay gap

At the same company a male and female work in the same job. They have the same qualifications, are equally capable, and are just as productive.

For the sake of the argument, we give them the exact same age (say 26), the same level of work experience, and even give them the same ethnic background. Our two workers are exactly the same except for their gender.

If the man earns more than the woman, discriminatory practices are at play. Plain and simple, that crap needs to stop.

The good news story is that the gender pay gap has narrowed dramatically. Well done us.

The Gender Income Gap: Different dollars = Gender income gap

Women on average earn less than men. You know that, you read that a million times, and you are rightly somewhere between annoyed and outraged by this. There are many factors at play here.

The fact that in many companies to this day women doing the same work as men yet somehow take home less money (see The Gender Pay Gap above) is only one factor.

Whole industries dominated by women don’t pay well, just ask anyone working in a care or education job.

Then there is the often-quoted ‘motherhood penalty’. Women take off several years to care for the kids, and when they return to work they get paid less than their male colleagues (who, granted, now have several years more direct work experience).

Put all this together and women end up earning less than men.

The gender pay gap is closing rapidly. That’s great news but not for all women. The younger you are, the more you benefit from this trend.

We are ultimately talking about a primary carer pay gap, rather than a gender pay gap. It is women who are primary carers, so why bother talking about a primary carer penalty rather than a motherhood penalty? Isn’t that just semantics?

No, it’s not just semantics.

Things are changing faster than you think. Women are outperforming men in primary, secondary, and tertiary education. I wrote previously about how education is the best predictor of future income. We should expect the share of women in classic high-paying professions with high entry barriers (lawyers, doctors, ???) to increase since they take home better grades.

We are now facing a world where the gender pay gap is closing and where a higher share of women pursue careers in high-paying industries.