Many highly skilled and experienced programmers would struggle with this kind of thing in a whiteboard interview, but then if hired would be very good at the job.
The interview scenario is just not similar to on-the-job coding. It has different social pressures, time pressures, access to help, access to privacy, etc. etc.
Plus, for someone like me (I studied machine learning and stats, and all data structure knowledge is self-taught post college, yet I have 6 years experience writing scientific code, performant database stuff, etc.) I am always hearing about data structures and algorithms that are supposedly "fundamental" but I never even heard of them before and have yet to need them in a job.
Basically, all of my experience, and all of the experience of hiring software developers in any of the companies I've been in just completely suggests what you're saying is actually not true. It's just a story we tell to allow us to keep our crab mentality hazing rituals.