Why employees with better social skills earn more

Some scientists have predicted that almost half of all jobs done by humans could be replaced by robots within the next 10 years. A new study shows, however, that humans do have one defense: their social skills.

A new study by David Deming at the Harvard Graduate School of Education shows that social skills are becoming increasingly important to employers and that the interpersonal abilities of workers are going to stave off robotic replacement.

Deming says computers can’t read humans the way people can, limiting their abilities in the workforce.

“The reason is that computers are still very poor at simulating human interaction,” he said. “Reading the minds of others and reacting is an unconscious process, and skill in social settings has evolved in humans over thousands of years.”

In the study, Deming found that a significant majority of job and wage growth since 1980 has been in industries that require a high level of social interaction, and workers that have better social skills end up earning more.

Deming created a model that tested teamwork production in which, holding for actual cognitive skills, he could measure the impact of a worker’s social skills.

Since each person may perform better at a certain task, communicating and trading tasks to make sure the more efficient person is performing the task is important. Workers with better social skills make this easier and less costly.

“However, the benefits of teamwork can only be realized through costly coordination among workers,” Deming writes. “I model social skills as a reduction in worker-specific coordination costs. Workers with high social skills can ‘trade tasks’ at a lower cost, enabling them to work with others more efficiently.”

Using this model, Deming came away with three conclusions:

1. Holding for a variety of factors, including cognitive skill, those with better social skills earn more: “I find that the wage return to social skills is positive even after conditioning on cognitive skill, noncognitive skill, and a wide variety of other determinants of wages.”
2. Cognitive ability and social ability are complementary for wages, and that link has increased over time: “I also find that cognitive skill and social skill are complements in the wage equation, and that skill complementary has grown over time.”
3. Workers who have high levels of social skills are more likely to work in social-skill intensive jobs: “Finally, I find that workers with higher social skills are more likely to work in social-skill-intensive and less routine occupations, and they earn a relatively higher wage return in these occupations.”

Another interesting element is that this shift has affected the sexes differently.

“Finally, I show that the economy-wide shift toward social-skill-intensive occupations has occurred disproportionately among women rather than men,” Deming said. “This is consistent with a large literature showing sex differences in social perceptiveness and the ability to work with others.”

Deming shows that the need for social skills is increasing, but according to a survey of employers by the New York Fed, employers are having a hard time finding workers who have these qualities.

Leveraging social skills is important for workers, whether they are trying to beat out a robot for a job or just get a raise.

This article is published in collaboration with Business Insider. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Bob Bryan is a Finance and Markets Intern for Business Insider.

Image: Matteo Achilli (R) works with one of his assistants in his office in Formello, north of Rome July 25, 2013. REUTERS/Tony Gentile.