The Importance Of Social Skills In The Labor Market

Why likability is an increasingly important skill in the labor market.

I. Skills

Being world-class acquiring specific knowledge will set you apart from AI. Doing so will make you valuable and irreplaceable.

A 1981 study in The American Economic Review coined the term “Superstars”, or a small number of people who earn disproportionately more.

The Economics of Superstars Source

There’s a steep demand curve for the best. Everybody wants to hire the best. Few want to hire average.

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II. The Automation Of Entry Level Jobs

Failing to get really good at one thing means bouncing from one cookie cutter role to the next as AI repeatedly replaces your job.

Last May, I wrote How To Not Lose Your Job To AI, in which I detailed how:

“Specific knowledge is information that cannot be taught at scale. Pick up and capitalize on specific knowledge because this is what AI cannot spit out answers for.”

Ironically, the examples of specific knowledge I used in that essay have already been automated with AI.

As a result, you need to be at the bleeding edge of technology and creativity.

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III. The Growing Importance Of Social Skills In The Labor Market

I’m nerding out over a working paper by David J. Deming called “The Growing Importance of Social Skills in the Labor Market” (emphasize mine):

“The labor market increasingly rewards social skills. Between 1980 and 2012, jobs requiring high levels of social interaction grew by nearly 12 percentage points as a share of the U.S. labor force. Math-intensive but less social jobs — including many STEM occupations — shrank by 3.3 percentage points over the same period.

Employment and wage growth was particularly strong for jobs requiring high levels of both math 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 work together more efficiently… Using a comparable set of skill measures and covariates across survey waves, I find that the labor market return to social skills was much greater in the 2000s than in the mid 1980s and 1990s.”

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Most of the knowledge I use in my job at Salesforce, I learned on the job. Social skills is the lubricant that helps workers more freely trade information to win as a team.¹

Workers that will excel in the decade ahead will be have the following skills:

1. Social Skills: Being a likable, high EQ person makes you an easy partner to “trade” knowledge with.

2. Specialist Skills: Having some unique, useful knowledge that you can “trade” to others.

By working well with others, you and your colleagues win as a team. 1 + 1 = 3. A rising tide does indeed lift all ships.

1. I’m thinking of “trading skills” as similar to how nations use comparative advantage to trade with other nations, thus taking advantage of each other’s different factors of production, technology, and natural resources.