A labor pool's competence drops, especially at the lower/entry-level end, when educational achievement for the labor drops.

To illustrate with reductive absurdity: If every CS student in the market used AI to do all of their coursework, and got a degree still -- that would, among other things, likely reduce appetite on the hiring side.

Right, but there's no way of actually measuring whether or not there's a drop in competency if the earnest job postings aren't there to begin with. I.e. there's no way to test your hypothesis.