A gross simplification doesn’t mean the thesis is wrong.
However, I agree that employers should do much more on-the-job training. In my company there is almost no formal training for newcomers and it shows. A lot of guys get stuck at beginner level and never advance from there.
One thing I like to see in people now is that they have a wider look at the industry besides their direct work. I have a seen a ton of .NET devs who don't know what Haskell, Kotlin or Node is. I like people who read stuff like tech blogs to keep up to date.
I agree less capable people will need more hand holding, and that processes must be improved for “sorting hat” the student pipeline.
I see a disconnect in the way you describe those people and the motivation I'd generally ascribe to persons with these traits. Smart and hard working folk often seek the path of higher ed because it has more to offer than a random job with X months of training that's unlikely to be challenging, why would they be interested in that?
Aside: does the US still not have IT apprenticeships?
American IT apprenticeships are unofficial, and usually start as junior sysadmin/networking/infra/SWE roles, although I do know people who started as customer service or business analysts who transitioned to the tech side due to aptitude.
Side note: There are large enterprises who are publicly announcing they’re dropping a degree requirement for their roles. Definitely points to where the market is headed.
I don't really see your side note happening here in Germany, for higher level positions dropping degree requirements is (in my experience) usually only done post factum if a fitting applicant happens to appear, usually with relevant experience instead. In my view that reflects a lack of formal education in the applicant pool more than it does changing requirements in the market.