The situation is a little more complicated than you all are describing. Or at least I think it is.
For one, the declining student base is not equally distributed regionally. And the increasing affluence (at least until recently) of people who live in countries that have not invested enough in their higher education systems to meet demand has produced a significant stream of foreign students to the U.S. for undergraduate education. That’s something that gets discussed on CC all the time, and something we see and feel reading countless posts by non-U.S. students.
That doesn’t mean PhD programs aren’t graduating more people than there are jobs in higher education available. They are. And student tastes are definitely shifting away from humanities in a big way.
It’s ludicrous to suggest that any student in the past 20 years has entered a PhD program in the humanities with the idea that it was a ticket to a well-paying job. For the most part, I think they really love the humanities, and they look at PhD programs as crappy jobs competitive with working at Starbucks but instead of drawing espressos you get to read Great Works, think Great Thoughts, and talk with Great Scholars. You defer deciding what to do with your life for a few years, get some stuff out of your system, and maybe, just maybe, luck into an academic job somewhere that pays poorly – maybe slightly better than poorly, especially if you value the extras – but lets you do what you love. (An English Lit grad student who was an important mentor for my daughter, who I think was a 2003 Harvard AB, just got a ladder faculty appointment — her first – at a public flagship, albeit one better known for football than for literary scholarship. Prior to that, she has had a series of 1-2 year non-ladder appointments all over the country.) The real cost of graduate school is the opportunity cost, and if your alternative opportunity is food service and moving back with your parents – as was probably the case for lots of kids graduating in 2008-2011 – then being in a decently funded PhD program really does cost nothing. At least until you think of something better to do.