This is another problem produced by academic exploitation. Ph.D. students are produced 10-to-1 relative to tenure track jobs. Why would universities eat $50-60,000 in tuition and pay $25–35,000 in stipends per year per graduate student if they know they are over-enrolling? It's not like Ph.D. students bring money into a department, regardless of their level of "desperation" to get a terminal degree. That's a big and unnecessary loss to take every single year.
The answer is that grad students, like adjuncts, free the professors from the most onerous aspect of teaching classes: doing all the grading. In exchange for tuition and stipend, grad students have to serve as TAs once or twice a year (in some departments they can also take positions as Research Assistants or as administrators for undergrad programs). Some grad students will get the opportunity to sole-teach their own seminars. Because professors do not want to teach, and want to focus entirely on their personal research program and publications, having an excess of grad students around to grade, guest lecture, and fill out the course offerings every semester is worth the $25-$35,000 annual stipend (about the same that the adjunct professor writing this article makes).
You're right that universities don't have to offer any more than $35,000 + shitty benefits + no job security, because the adjuncts and grad students will still take the opportunity believing that it might turn into an opportunity to move up into the professoriate if they just work hard enough or if their next publication is just a little more brilliant. Doesn't change the fact that it's still a cynical and hypocritical exploitation of the "intellectual reserve army of labor" (to paraphrase Marx). Universities are some of the most leftist institutions in North America, but the professoriate and deanery are perfectly fine with naked exploitation both on the supply side (grad students) and the demand side (adjuncts).
If departments need graders, they should hire masters students rather than admit Ph.D. students and then cynically consume 5–10 years of their life. If departments need teachers to supplement their researchers, they should create a position distinct from tenure-track professor/reader, perhaps "lecturer," but that is not "part-time"/contract work and is compensated appropriately.