International organisations have pressed countries to prepare students for the knowledge economy by building real-life competencies into national curricula, and the OECD's PISA has assessed competencies like collaboration and creative problem solving. But is there really a deficit in competencies that schools must address? This review of empirical studies in anthropology and cultural psychology documents that people learn and practice many key competencies in everyday life. However, the situation affects practice, and school-like assessments are situations ill-suited to eliciting everyday competencies. The inaccurate deficit model and questionable assessments paint a misleading picture of how to solve underemployment in the knowledge economy.