The growing importance of social skills in the labor market

by on August 21, 2015 at 9:36 am in Data Source, Economics, Education | Permalink

That is a new NBER paper from David J. Deming:

The slow growth of high-paying jobs in the U.S. since 2000 and rapid advances in computer technology have sparked fears that human labor will eventually be rendered obsolete. Yet while computers perform cognitive tasks of rapidly increasing complexity, simple human interaction has proven difficult to automate. In this paper, I show that the labor market increasingly rewards social skills. Since 1980, jobs with high social skill requirements have experienced greater relative growth throughout the wage distribution. Moreover, employment and wage growth has been strongest in jobs that require high levels of both cognitive skill and social skill. To understand these patterns, I develop a model of team production where workers “trade tasks” to exploit their comparative advantage. In the model, social skills reduce coordination costs, allowing workers to specialize and trade more efficiently. The model generates predictions about sorting and the relative returns to skill across occupations, which I test and confirm using data from the NLSY79. The female advantage in social skills may have played some role in the narrowing of gender gaps in labor market outcomes since 1980.

There is an ungated copy here.

1 Iluvtacos August 21, 2015 at 9:48 am

I wonder how much social skills are also considered for jobs that don’t expressly require them. I consider myself to be an average worker but possess excellent social skills and enjoy working with all my co-workers (and vice versa). I honestly think that this has protected my job to a considerable extent due to the discontent that would arise if I were fired. While I’m sure a technically better employee could be found, the intangible benefits gained from having staff who enjoy working with each other may lead it to be more detrimental than beneficial.

2 John August 21, 2015 at 1:20 pm

I am seeing a few news stories aligned loosely on the theme that a liberal arts education is still what we all need. This despite CNC operators trouncing History majors in the jobs market. How much do CNC operators need social skills? Or would a grouch meet employer expectations better at the interview?

I think I get what you are saying, that while social skills are good, their role in organizations may vary. It rapidly gets complicated, especially when you can’t run a CNC mill.

(I was a software developer before retirement, and my interview skill was probably to “look nerdy”)

3 Hazel Meade August 21, 2015 at 9:54 am

I wish someone would define “social skills”. What the heck does it mean? Not being shy? Being a good salesperson/networker? Being funny ?

4 prior_approval August 21, 2015 at 10:14 am

Having the right parents often ensures the correct social skills – which certainly sounds better than saying inherited wealth is a good way to remain apart from those lacking it.

5 derek August 21, 2015 at 10:21 am

Yes. Teaching children to say please and thank you, to not fight, to sit at the table while eating, to listen to and respect older people, etc. all translate to very effective adult workers, all else being equal. Assholes have to be exceptionally good at what they do to remain employed.

6 Hazel Meade August 21, 2015 at 10:45 am

Yes, to some extent, I think “social skills” is sometimes code for having the right class markers. Like knowing the right type of business suit to wear.
If you’ve ever seen the movie ‘Working Girl’, one of the first things the lower-class secretary learns is what sort of jewlery to wear and not wear and how to do her hair to “fake” being an upper-class woman.

Not that appearance isn’t important, but often it’s ONLY important because other people have stupid class prejudices.

7 Jeff R. August 21, 2015 at 12:30 pm

Those are all pretty minor things. I don’t think stuff that’s that subtle is really holding anyone back in the workplace. More obvious things like not dropping “aint’s” in conversation with people on the job, for example, is an important social skill and class marker.

8 FUBAR007 August 21, 2015 at 1:09 pm

“I don’t think stuff that’s that subtle is really holding anyone back in the workplace.”

Depends on where you work. To the people who discriminate according to such things, they aren’t subtle at all.

Above a certain level, perceived functional excellence is just a baseline. Having that just gets you in the door. Staying there, much less advancing further, requires reading the social environment and all the absurd, idiosyncratic, ornamental bullshit therein and adapting to it. Fast.

9 mulp August 21, 2015 at 1:55 pm

Bryan Stevenson, a lawyer, tells of sitting in court at the defense table in his suit waiting for an Illinois court to begin, and the judge on entering blurts out “hey you, get back outside until your lawyer arrives”, to which he responds telling the judge its the lawyer for the defense, and the prosecutor and judge laugh, and he says he laughs to avoid harming his white client’s case.

That is an example of class holding people back in the workplace, and of social skills to mitigate the class racism of the judge.

10 Harun August 21, 2015 at 8:01 pm

I bet its being able to understand what a customer wants and how to handle them, i.e. sales.

There is a reason good sales people make a lot of money and many companies are essentially founded by sales people.

11 derek August 21, 2015 at 10:18 am

It is pretty obvious. There is a programming technique where two programmers work closely together, one at the keyboard the other checking. It would fall apart if the interactions ended up in fist fights. The ability to acknowledge mistakes, the ability to communicate clearly, the social graces that allow people to work in close proximity over a period of time.

What I do requires not only technical skills and experience, but the ability to communicated. The clients need something, or have something not right, and being able to listen and discern from their distinctly non technical descriptions what is happening is a must. As well the ability to work in a home or business around other people without being a problem. This is real, and comes down to often extremely simple things like basic grooming, control of your tongue, manners and basic consideration for other people.

Sales is another level again, but often simple decency coupled with technical excellence is all that is needed to be good at that.

The most debilitating characteristic in complex fields is the inability to admit being wrong. I constantly repeat to the guys that I’m training that you are wrong over and over again until you are right, and that is basic to what we do, so get used to it.

12 Hazel Meade August 21, 2015 at 10:38 am

I think there is more too it than that. If it was just about not being an asshole than 90% of the workforce would have good social skills and it would just be a boolean, you either have them or you don’t.

In my office, we have one guy who is a senior manager who will get defensive if you ever suggest that there is any sort of problem with the piece of code his group is responsible for. Even if that problem is clearly not the fault of him or his workers. It gets to the point that you can’t assign work or address issues properly because he’ll object to having this thing categorized in a way that he perceives to be blaming his area.

IMO, you should just not get emotionally attached to whatever position you take.

Still, it remains really ill-defined. Aphorisms and anecdotes don’t really adequately define the concept.

13 derek August 21, 2015 at 10:53 am

I agree, but a capable programmer that is hard to get along with still has lots of opportunities because of market demand for those skills.

In other skill sets or industries where the demand is lower due to automation or foreign competition the situation would be different.

On the other hand, not letting some incompetent manager harass your crew is also a valuable social skill. I deal with difficult people and it requires sometimes being quite forceful.

You are right it is hard to define. It is at best a continuum, but more than likely a combination of traits to fit a specific set of circumstances. Some people can get away with murder, while others have to walk on tippytoes.

14 Dan August 21, 2015 at 11:38 am


I agree this is the crucial bit: “being able to listen and discern from [clients’] distinctly non technical descriptions what is happening.” Also crucial: the ability to just bite your tongue and not respond to nasty behavior.

15 Iluvtacos August 21, 2015 at 10:25 am

In broad strokes I would define it as having other people want to be in your company. So someone who isn’t shy does not necessarily have good social skills. I also would say a networker does have good social skills but a salesperson doesn’t necessarily. Being a good salesperson generally requires assertiveness/pushiness that can be off putting in a social setting. However, that is not to say salespeople don’t also have good social skills. I’m just saying they are different things. Being funny is a neutral. I’ve met unpleasant jerks who are hilarious and the awesome people who are hilarious. Different types of humour generally but humour is a very diverse trait.

16 Axa August 21, 2015 at 10:48 am

Imagine you are the manager of 15 people working under the same roof. There will always be a troublemaker that opens the mouth too much. For example: someone who will say the boss is an idiot, X is the only one who gets bonus making everyone else envious, someone who is aggressive when confronted about mistakes in the job, someone who can’t have a woman as a manager, someone harassing the rest of the team and many things more. People like this are described as lacking social skills and reduce the productivity of any team.

17 John August 21, 2015 at 1:26 pm

Actually Hazel, I think this is a very good question. Most people mistakenly think that work environment social skills are the same as cocktail party skills, when for most people they are not. At all. Work environment social skills include being able to take on a role, one appropriate to a position in an organizational chart, and playing it steadily through the day. With in that org-chart-role there is room, and need, for camaraderie, but many cocktail party skills would be inappropriate and harmful to team cohesion.

I think an American advantage is that we can take on, and drop, roles like this independent of our social position. We are not born into the officer class to degree of say, prewar Britain.

18 Hazel Meade August 21, 2015 at 2:17 pm

Thanks. I think it’s a good question for all sorts of reasons. For one thing, if your going to be telling people that social skills care valuable in the market, that information isn’t useful to them unless they (a) know what they are and (b) know how to go about learning them.

As far as I can tell, the closest thing you can get to a class that teaches social skills is an etiquette course, which is probably not what anyone really means. Many people may know that in some way their social skills are not great, without being able to identify specifically what they are doing wrong. Vague definitions like “good with people” and so forth doesn’t give anyone a decent idea of what they are supposed to be trying to improve.

It also makes the science really fuzzy. If you don’t know and can’t define what social skills are, then how can you possibly be measuring a positive effect from them?

19 Lord Action August 21, 2015 at 2:47 pm

Oddly enough, the best environment I ever had for learning social skills in a work-appropriate way was lab classes back when I was in engineering school. Learning when (and how) to listen, when to speak, when to joke or goof and when to press hard, how to take on different roles, etc. Even though I don’t actually do engineering anymore, those little practice projects and interactions were much more like actually being an adult in the working world than any class, problem set, test, or b-school case ever was.

But I don’t recall being taught how to read a room, how to tell if a colleague was genuinely upset, how to read between the lines of a client request, how to play different roles even when they don’t suit your personality, how to coach, or any of those soft skills that are so important. At least not until I was high enough in an organization that I could order coaching for whatever I wanted. Mostly, this is stuff you pick up from your mentors.

20 Ricardo August 21, 2015 at 11:54 pm

You should read the first part of the paper. “I study changes in the the task content of work using data from the Occupational Information Network (O*NET). O*NET is a survey administered by the U.S. Department of Labor to a random sample of U.S. workers in each occupation… Third, I define an occupation’s social skill intensity as the average of four O*NET skill measures: 1) Coordination; 2) Negotiation; 3) Persuasion; 4) Social Perceptiveness.”

That sounds right to me, although these four skills can be rather different. Negotiation and persuasion are necessary almost everywhere. On the other hand, a salesperson who is left to his or her own devices and is paid on a commission basis may not need much coordination or teamwork skills. Social perceptiveness sounds like the very basic ability to read other people’s facial expressions and body language which is necessary in almost any job, not to mention in life outside of work.

21 BDK August 21, 2015 at 3:51 pm

Depends on the job function. A trial lawyer has to be trustworthy and likable to a jury of 12 random people. A sell side trader has to be able to shoot the breeze with other traders and also make snap decisions about what market info she should share and what she shouldn’t, while convincing the buy side to give up more info than he A manager in any industry has to know how to alternate the open hand with the closed to inspire in subordinates both the desire to please and the fear of disappointing. Senior management (even of tech companies) have to convince investors that they will listen to investor concerns and ideas (even if the investors are usually wrong).

22 Sharon lee August 22, 2015 at 6:50 pm

It’s the interaction to another human being.

23 Grant Gould August 21, 2015 at 10:49 am

An interesting and realistic aspect of this model is that under it there is no well-defined, order-independent notion of the marginal product of a worker that sums to less than the product of the company.

The change in company product from the next additional employee consists in part of increases in the productivity of any existing employees with whom a comparative-advantage trade is newly possible (which may and at scale likely will include trades not including the new employee!). If those trades are attributed to the marginal product only of the new worker, existing workers will always appear to have lower marginal product than newer workers regardless of actual contributions or skills. If on the other hand marginal product of each worker is computed as if that employee were the newly hired worker, the marginal products of all workers will sum to more than the product of the whole company (in the Jones/Smith example in the paper, each employee raises the firm’s product from 2 to 12 and so has marginal product 10, for a total marginal product of 20 in an organization of total product 12). It is clear that the actual production of each employee is 6, but it is hard to see a definition of a margin at which this is the marginal product.

In this circumstance it is hard to imagine how wages could be rationally set anywhere near marginal productivity. Which makes it, in a way, very realistic.

24 Poincare August 21, 2015 at 11:25 am

It’s funny that economists would be interested in this. Good social skills, in my experience, are a predictor of average competence and work ethic. The happy go lucky schmoozer is very rarely as good at a given task as the diligent striver or the moody genius. Just another comicly simplistic attempt to model human beings by an overambitious academic discipline.

25 Dan August 21, 2015 at 11:44 am

Both the diligent striver and the moody genius usually need a small army of average nice schmoozers to get anything done. It’s called comparative advantage.

26 Brooks Alvarado August 21, 2015 at 11:45 am

“Good social skills, in my experience, are a predictor of average competence and work ethic.”

Good point. This has often been my experience as well. On the other hand, it is also true that you’ll probably need to collaborate with many other people in order to be able to build a viable product, and some of the behaviors mentioned upthread (e.g. the defensiveness) are real productivity-destroyers for the team.

So what would you tell youth today about what they should focus on, technical or social skills?* I would maybe put it in terms of the old adage about poker: if you can’t tell who’s the mark, it’s you. Yes, you need the social skills in order to play the higher-level game of figuring out who’s ganging up on who, and how to join the winning team. But if you don’t have the technical skills of knowing how to play poker in the first place, you’re not even in the game to begin with.

*Here’s I’m assuming that “social skills” are really skills, i.e. that one can learn them even if they don’t come naturally.

27 Hazel Meade August 21, 2015 at 11:51 am

Spoken like someone who has gown up a big nerd ….

Personally, I would LIKE to believe that nerds with poor social skills are better workers. I don’t think I have sufficient bredth of experience to say it’s true though. I hang out with engineers all day so my sample is biased.

28 A Definite Beta Guy August 21, 2015 at 12:59 pm

Depends on the job and the coworkers. My INTJ friends in nuclear engineering and Network Management really don’t behave like me in accounting anymore, because, you know, I don’t have the luxury of interacting with nerds on a daily basis.

29 derek August 21, 2015 at 2:02 pm

I don’t think that is being talked about. Shmoozers don’t last in what I do, you need competence. But social skills enable you to delegate effectively, train others, manage a crew, deal with customer expectations. Those are social skills that are very difficult, as difficult to do well as many technical tasks.

In what I run into the assholes are usually technically incompetent. In any endeavor of any level of complexity you need interaction with other people yo learn, bounce ideas off of, be corrected by, etc. Someone who is incapable og interacting with people as smart or smarter than they, refuse to learn, refuse to delegate or are incapable of doing it, end up working alone in insulation building a one person cheerleading squad that limits any learning and progress.

30 BDK August 21, 2015 at 2:56 pm

Your observation is also consistent with the possibility that the people with whom you interact with inferior competence are having similar career advancementl as those with superior competence in similar roles because of their superior social skills. Maybe there is a cadre of people who have both competence and superior social skills who are just killing it in more senior positions or at better firms.

31 Too Late August 21, 2015 at 3:41 pm


You should post more.

32 News Canada August 21, 2015 at 11:34 am

It is undeniable that women stand out in social habiliadades , however , despite the social skills related professions are in Ignition as said, wages of female hand labor are still very low compared to men .

Maybe we’re living in the golden age in terms of opportunities for women …

33 mulp August 21, 2015 at 1:39 pm

Why do people study labor issues without considering the negative impact on GDP growth from constant efforts to slash or keep stagnant wages for the jobs that can not be replaced by machines eliminating workers entirely?

The GDP growth in the US is driven by immigration and ever increasing debt and reduced savings leading to reduced investment, of which one form of saving is taxes to pay for infrastructure that provide long term future returns to those taxed.

34 chuck martel August 21, 2015 at 6:55 pm

What are you talking about, more roads and airports? The government takes everybody’s tax money and builds a light rail from one suburb of Phoenix to the downtown at a fabulous cost that no one wants to ride. Where’s the long term future returns? A local contractor has the the motto, “Building for Future Generations”. Actually, they’re being paid to build whatever it is they won the bid for. The future generations can and will take care of themselves, as the current generation does. In terms of infrastructure, roads for instance, cars have only been significant for less than an hundred years. Paving over a huge proportion of the country means making a commitment that future generations won’t be able to escape regardless of whatever technological advances should occur. The current population doesn’t have the right to pass along infrastructure and the debt that goes with it to those in the future. They’ll have their own requirements and desires that those in the present can’t imagine.

35 CH August 21, 2015 at 2:30 pm

I presume these are the same social skills that it takes to rise to the top at Amazon, no?

36 Gary Steinmetz August 21, 2015 at 3:32 pm

What is the correlation between those jobs requiring greater social skills and those jobs requiring occupational licensing?

37 David Foster August 21, 2015 at 6:18 pm

Many corporations today have organizational structures that could politely be called “multidimensional” and “free form,” or, not so politely, “a god-awful mess.” Part of this is due to successive mergers & acquisitions, part of it is due to bad organization design, and part of it is due to inherent complexity of the work. When it is not immediately clear who has the authority to do or not do particular things, or approve or disapprove them, social navigation skills are at a premium.

This is true not only within the corporation itself but also for people seeking to do business with it.

38 M August 22, 2015 at 3:01 am

With this topic, its hard to find a mechanism which is prima facie implausible.

Personally, I’d associate social skills with raised self confidence and responsiveness to social incentives (wanting to get a high paid job to win respect). And so that’s the pathway I’d choose to explore. Personally harder to see social skills, broadly defined, improving productivity.

39 derek August 22, 2015 at 9:03 am

Managing people is a social skill. Communication is a social skill. Good writing, meaning effective communication through writing is a social skill. Taking on a project, delegating effectively and seeing it through is a social skill, an extremely difficult one. Being a production engineer, having a crew of people of varying skills, varying interest and focus, and keeping the human machinery working as well as the physical machinery is a social skill.

Dealing with consultants is a social skill, where you discern their interests and make yours coincide. Dealing with regulators is a social skill, and if some regulatory agency can put you out of business you better damn well have someone you talk to on a regular basis so you know what they are expecting. Security is a social skill, both in providing real barriers to harm and perceived sense of security.

Limiting turnover in staff is a social skill, getting rid of people that don’t fit is as well.

Any interaction with another human requires social skills. How can the effectiveness of lack of not affect productivity?

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