Can officers be demoted?

Technically, Commissioned Officers can be demoted down to 2LT. I've never heard of this happening though. I have read about senior Officers being demoted for misconduct right before they retire. For instance, a 3-Star demoted to 2-Star before retiring. I've even heard of a 1-Star being demoted to COL before retiring (that has to hurt; being a flag officer and then retiring below that).

Although very rare, the short answer is yes. That said, most often than not, a commissioned officer is adjudicated to have seriously violated the UCMJ is separated from the service. Also, there have been instances when a flag officer (general/admiral) has not only been invited to retire but also retire with less rank than that which he or she had attained during their active service. Is it fair? That, I believe, would depend on an individual's point of view. I can't think of any of the officers whom I've known who have committed offenses that would normally be considered a violation of the UCMJ but I have known a few who have been unfair to their subordinates.

Officers, in courts-martial, are dismissed from the service, thus do not receive dishonorable “discharges”, rather dishonorable dismissals. They cannot be forced to work (hard labor). If they do not volunteer to work, they remain in their cells. They also carry the title of “officer inmate” with no other perks. They are also expected to follow all orders, etc. As a CID agent, I sent several to the Stoney Lonesome.

A number of years ago I worked with a individual who had been on active duty in Europe. He was an 0-3 at the time. He was caught drunk driving on post. He was offered an alternative from resigning his commission, to being separated from AD and flopped into to the Army Reserves. He had no loss of rank, but was never going to see 0-4.

I have seen some Officers that got passed over three time for promotion to the next highest grade get reduced to an enlisted grade. They did have the choice of getting out or taking a reduction in rank. If they stayed in as an enlisted man however they could still retire in the highest rank held which was of course the Officer rank but would not return to that rank until they retired. There are some I can think of that did leave the service then and the Air Force was better off without them. That wasn't always the case though, most did well as enlisted men that did stay and I did feel bad for most of those I knew and some I worked with. I actually don't agree with that in all cases as being a good remedy especially when job performance wasn't the issue.

Yes, it is possible, but they are usually separated from the service instead.

After WWI, WWII, and Korea there were mass reductions in Officer Grades. Active-Duty Reservists were returned to their Guard and Reserve Units, where they were Demoted (Usually to O-2). This system was apparently much more fair to good officers than the “Bush-Train-Wreck” I endured in the 1990s. Rather than use Reduction-In-Force/Grade Reduction, or awarding Honorary Reserve Retired Status, the Army used Promotion Boards to kick us out. A few of us in high-visibility, extremely-competitive, sensitive career fields had to Call-the-Army-Out-Into-The-Street to salvage our professional reputations. We were promoted and given our choice of assignments.

Then you don't listen nor read. The was a GEN who was caught doing something and forced to retire as a COL. This several months ago.