I know a number of children who have dyslexia despite having been taught phonics. It was so severe in Woodrow Wilson (whose predates Dewey) that he had to make up his own code as a workaround.
Dyslexia is real, but sight-word reading may be skewing the real dyslexic numbers upward because children might not know how to convey that the letters are in the right places but that they simply are having trouble memorizing how the letters are arranged. Sounding out the letters is a tool, but they have no tool to work with.