I have interviewed people with 10+ years of experience who failed fizzbuzz (in their language of choice, unlimited time, googling encouraged). There really are people out there who do not meet even the lowest of bars, despite having years of experience on paper.

Some percentage of the workforce essentially manages to not-get-fired and little else. I don't necessarily think that's a rationalization about a specific hiring circumstance, rather that it's a fairly general observation that probably applies in lots of fields.

It's not a rationalization at all. Get a job paying well and learn how to do it in 3-6 mos. Now repeat doing said job over and over for 5 years. The person ends up with ~6 mos. experience. I have interviewed these people. The problem is that it is a slow skill drain and by the person realizes they are behind they are often so far behind the level of effort to catch up keeps them stuck.

It is basically innovators dilemma on a personal level. In order to stay growing you have to move on and take risk, but that is hard to do when you can easily do your job and make okay money. Then one day that job is gone.