That generally leaked in from other industries, but it seems to be going away. Since great developers are productivity multipliers ... companies are starting to understand that keeping them coding when they are 25x more productive than an average coder is worth more than having them manage 8 average developers.
There is a reason "developers" are getting hundreds of thousands of dollars in retainment packages to keep them from starting their own shops.
This is true in most fields. In the officer ranks of the military, you're generally forced into retirement if you're passed up for promotion twice. In many government jobs, you're forced out if one of your former subordinates is promoted past you.
Only twice? I've never know the ins and outs of the military (and ex-PFC Wintergreen is the closest I'll probably ever know to people being demoted or missing promotion) however this seems incredibly harsh.
It used to be, but the industry is changing. The status of programmers is going up and that of middle managers is going down. As Silicon Valley goes today, so goes BigCo tomorrow, and woe betide the BigCo that does not. That's the theory, anyway.
