Depends on who you ask. Some internet opinions:
"Basically a derisive term originated when the first all-metal aircraft appeared into a world dominated by beautiful fabric-covered 'real' aeroplanes.
Like the container for the eponymous product they were all made from metal, whilst the contents were pink, identical lumps of almost inert meat like substance as opposed to the bold and heroic pilots of the stick and rudder persuasion."
Or...
"A derisive term yes, but not because they were made of metal, but because certain fighter pilots of the 40s and 50s who were asked if they wanted to take part in the space program felt that these modules were not piloted but rather the 'pilot' was just a test dummy in a tin can, meat in a can . . . . spam can.
That is why Yeager turned down the opportunity and stuck to being a test pilot. He felt all control was on the ground rather that with the pilot."