In any industry the customer ends up "paying" for inexperienced people. Otherwise you wouldn't get anyone new in any business.
That's just how it works. New engineers, new designers, new teachers, new mechanics etc.etc.
We would all love to only have to deal with people who have been doing the same job for 30 years, but that isn't a realistic propsition, nor is it necessarily the best way to get good service.
There are PPL's out there who would make great FI's, but there are a far larger number who would be god awful.
At least with young inexperienced CPL holders, a good CFI can try and mould them into a decent FI and their recent training and capacity to learn makes them ideal candidates.
Of course there are good "hour builders" (I hate that phrase as the vast majority of FI's do an excellent job no matter what their original motivation.), there are the occasional idiots too, but on the whole, standards aren't slipping in any way.
Have pass rates changed? Are we having more accidents caused by poor training? If no, then how can you quantify a statement as open as "Instructor standards are falling". Frankly a load of bo**ocks if you ask me.
We do need to work out how to retain good FI's in the industry, but harking back to the "good old days" of PPL FI's is madness. That's what scr*wed the industry in the first place and ensured that no-one could get paid enough to even make a living wage.
So what happens, people bail as soon as they can, why? They can't afford to do anything else. End of story.
The simple answer is that people need to pay more for their training. At even £25/hr an FI is cheap compared to plumber or electrician or even a hairdresser and yet people whinge like mad when they are expected to pay a sensible amount for someone to teach them to fly.