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How does being over- or underskilled at the beginning of a worker’s career affect further skill acquisition, retention, and promotion? We answer this question in the context of the United States Air Force, where enlistees are assigned to over 130 different jobs across four career fields. We take advantage of the fact that enlistees are allocated to jobs primarily based on their performance on field-specific portions of the ASVAB, which jobs are currently available, and who they are competing with at the time they enter. Using both OLS and IV designs, we find sizeable and asymmetric effects of being over- versus underskilled relative to the typical person in the same job. Skill mismatch matters in the short run during technical training and in the first five years on the job. Overskilling results in large increases in knowledge acquisition both during training and on the job, which in turn increases the likelihood of promotion. It also modestly improves retention during training. In contrast, underskilling has relatively modest negative effects on knowledge acquisition, but leads to sizable increases in both dropping out and repeating training. Since by definition not all workers can be above average for their jobs, these results highlight tradeoffs organizations face when assigning workers to jobs or tasks.