Labor market rewards to performing routine tasks have fallen, while the returns to workers ability to cooperate and adapt to changing circumstances have risen.
Automation has played an important role in the recent evolution of the U.S. labor market, transforming the relative demand for workers with various skills and in different occupations. In The Growing Importance of Social Skills in the Labor Market (NBER Working Paper No. 21473), David J. Deming demonstrates that high-paying, difficult-to-automate jobs increasingly require social skills. Nearly all job growth since 1980 has been in occupations that are relatively social-skill intensive, while jobs that require high levels of analytical and mathematical reasoning, but low levels of social interaction, jobs that are comparatively easy to automate, have fared comparatively poorly.
Social skills are important in the modern labor market because computers are still very poor at simulating human interaction. Skill in social settings has evolved in humans over thousands of years. Human interaction in the workplace involves team production, with workers playing off of each other’s strengths and adapting flexibly to changing circumstances. Such non-routine interaction is at the heart of the human advantage over machines. The growing importance of social skills can potentially explain a number of other trends in educational outcomes and the labor market, such as the narrowing – and in some cases reversal – of gender gaps in completed education and earnings. Continue reading »