often, higher degrees are a result of unemployability, and a PhD is an indication of extreme unemployability ; - )
I always thought it was the other way around, i.e. it is harder to land a job with a higher degree as you are deemed overqualified and hence higher risk of you getting bored and leaving the job. So people even have to omit their PhD in resumes, especially immigrants in US and Canada.
I think both statements are true. The phenomena that I was referring to is where the really gifted students land jobs out of undergrad, because they can, and the second string goes on to masters level, because they have no choice.
I have never heard of a masters level degree being overspecialization, as can be the case for the PhD, but perhaps if you are fresh off the boat as an immigrant and need to aim for a technical job, or taxi driver, in order to develop english skills, that could be a factor.
Where I work there is a sometimes not too subtle tension between MAs and PhDs, and one senior executive point blank says he won't hire them for non-research positions.