There is a need to impress your interviewer to the point that they want to interview you, and the power imbalance for them to reject you even if they interviewed you! This is the difficult part!
Where companies fear a candidate who is too good. Can happen with universities too. It’s a fear of leaving due to them finding a better option. I think it’s a bit illegal and unethical, yet because the recruitment process is pretty much hidden, it's almost impossible for them to get caught.
Psychologically, it’s disproportionately valued compared to all other moments of the involvement (excluding the peak-end bias). It's likely biological: Someone finding a pattern means the first impression is the basis for comparisons! Employers may hear there is a "deeper nature", but pragmatically they cannot really know for sure, or may not have the time to find out!
There’s just so much competition, and it’s become the reverse of old times where employers would be grateful if employees applied: Applicants have to try hard to beg for a job and might not even get into anything after 200+ attempts! But this… Well, it just means that people need to work harder than before even in school. Can be a bit of motivation. And me, might as well apply for a gigantic bucket of jobs even if I can’t do the jobs I actually want because more attempts = more probability of getting into at least one Still, perhaps, extracurriculars aren’t really “extra” anymore; it is likely to be a distinguishing thing, without it the person looks bad to the employer… (Signalling to employers of resilience/teamwork, even if the person actually hates the “forced overtime labor”…) And perhaps people should focus on what they can control (themselves) rather than blaming external circumstances (population, economy)... Red Queen’s Race (Evolutionary biology of constantly getting better, and others will too so standards keep rising over time)
They may want power and authority, but humans intrinsically want freedom and fairness. Them having the power to reject anyone they want might be a bit unfair. Perhaps this may have also led to having too much stress to even get employed in the first place!