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Soft Skills and Their Importance in Today’s Labor Market

Essential Soft Skills

Soft Skills Predict Career Success

According to a newly published article by David J. Deming for the National Bureau of Economic Research, there is strong evidence that
“soft skills” (also referred to as “non-cognitive” skills) are increasingly important indicators of success both at school and in adult life.
Deming references a 2017 survey by the National Association of Colleges and Employers that identifies that the top qualities sought in
new graduates are the ability to work in a team followed closely by written and verbal communication skills.

Soft Skill Occupations Grow as STEM Opportunities Slow

Deming points to evidence suggesting that cognitive skills (those emphasized as and measure by IQ tests) as a predictor of labor market
success has declined since 2000 while there has been a corresponding uptick in occupations that emphasize strong analytical and
interpersonal skills. These include occupations such as business support, finance, managers, nurses and physicians. Between 1980 and
2012, careers that focused on social skills grew by almost 12 percentage points of all U.S. jobs and were associated with
a more rapid wage growth
for the same occupations. In contrast employment and wages for high math low social skill occupations
such as STEM, grew more slowly. This is not to say that cognitive skills are not required – clearly they remain essential – but they are no
longer sufficient for obtaining a good, well-paying position. Candidates must bring social skills to the table as well.

Soft Skills – A Uniquely Human Skill-Set

What accounts for the continued importance of soft skills? The author points to a recent article by David Autor about the history of workplace
automation which argues that new technologies actually result in an increase in the importance of skills and tasks for which there is still
no suitable non-human substitute. Certainly machines are better than humans at performing routine tasks that follow explicit rules, but people
are much better at tasks that require flexibility, creativity, and judgment – qualities that don’t require an explicit understanding of rules. Examples
are the way in which people observe and intuitively interpret the behavior of other people which in turn informs their interaction with that
individual (like whether it’s o.k to tell or laugh at an off-color joke).  Automation simply can’t decode or duplicate human interaction,
team collaboration, and just plain understanding of people and their behavior.  A machine can answer a phone and direct a call, but it takes
the soft skills of a human to “read” the tone of the conversation, interpret the caller’s motivations, and respond in a uniquely personal manner.

This ability to observe and interpret behavior is also consequential in team behavior.  According to Deming, effective teamwork requires a
complex and context-dependent understanding of one’s team members and their likely responses to a wide range of scenarios. ”
For humans it’s intuitive but not likely to be codified by automation.

Soft Skills in Your Educational Objectives and Budget

The data presented in the article underpins the necessity for professional development that emphasizes the importance of soft skills as
an indicator of success in the labor market.  Human resource professionals, managers, supervisors and team leaders do well to
continue to ensure their training objectives and budget includes these important skills.  At IEA, we’ve listened to the needs of many of
our customers, particularly those responsible for hiring and training, who have identified soft skills as the area of development most
needed for on-boarding as well as on-going professional development.  We’ve responded by developing a series of Essential Soft Skills
training webinars, as well as on-site classroom training for interested companies.  To learn more about our program click here.


The Value of Soft Skills in the Labor Market
David J. Deming
The National Bureau of Economic Research