If you're talking about FizzBuzz, that's about candidates, not stably employed folks. Candidates are by definition a pool that favors people that haven't been hired already, except for people new to the industry. https://www.joelonsoftware.com/2005/01/27/news-58/
(Also, there's no rigorous evidence supporting the hypothesis that most people in the industry or even most applicants can't write FizzBuzz, as far as I know. But that's not quite relevant to your question about perception; I do admit there is a perception that the hypothesis is true.)
Good technical recruiters are rare, and seldom work for big companies like Google, Facebook, Amazon, Cisco, (Yahoo), IBM, etc. Most of them read questions from a script, and then believe that the map is the territory.
That's an odd assumption to make, that the average recruiter is competent, for a community that assumes the vast majority of their fellow engineers can't code.