As a first year college student hired after high school in a startup, I had a real eye opener when the person they brought in after me--with a MS in CS--couldn't, well, do much (they'd called me back after I left).
I finally had to take a stack of cards to manually demonstrate a bubble sort. No, I'm not defending or advocating bubble sorts. With an MS, he just plain didn't understand the concept.
His output roughly quadrupled once I was around (he wasn't around much longer).
And I've seen it in other areas. I have a Ph.D. in Economics and and statistics as well as a law degree, and I've met people in both who can function their way through the classes and dissertation, but just plain can't do anything useful in the fields.
hawk, j.d., ph.d., esq.