Individuals can go ahead and refuse to give out their password to prospective employers, and they may not hire you. If it only happened now and then it wouldn't be a big deal, but what happens when all employers routinely ask for your facebook password? Then you'll be in the same boat as all those people who refuse to urinate in a cup...with fewer employment options.
Edit to add: I can understand the reasoning behind pre-employment drug screening, and in many cases I agree with it. But facebook? Come on!