This is true. Many departments are granted budget depending on their PhD student headcount (and where headcount doesn't determine budget it often determines prestige). This leads to two things: 1) no consideration for the actual demand for PhD recipients; and 2) no impetus to actually get students out of the program. When I was at University of Chicago, their anthropology PhD program had an average completion time of eight years! Of course, many of those got opportunities for tenure-track employment. Still...