How do academia and graduate advisors deal with the fact that the cost of living is dramatically higher but graduate wages is stagnant?
This might prove controversial but I'm going to reverse the question: why do PhD students accept being underpaid? As long as academic institutions find candidates willing to be underpaid, they have no reason to raise the wages. If the PhD students themselves don't defend their claim to a better compensation, who will?

In some countries PhD students are staff with a proper employment contract (I'm aware of at least Germany and France, probably others as well). The advantages of this system from the PhD student perspective are:


Access to health, pension and unemployment benefits in accordance with the country regulations
The PhD counts as a professional experience
The salary is usually indexed on some public employment salary scale
Symbolically improved social status, e.g. when being vetted for an apartment or a mortgage.


Obviously this option is more costly for the academic institutions, which means that they had to reduce the number of PhD students hired in order to increase the salary.

In France, the transition from student stipend to work contract happened at the beginning of the 2000s. The movement originated from the PhD students themselves and was driven by the Confédération des Étudiants Chercheurs (students researchers federation, later appropriately renamed as the Confédération des Jeunes Chercheurs, junior researchers federation). The central claim was that even if PhD students are researchers in training, they actually carry out productive research work, as illustrated by the fact that 50% of scientific publications have a PhD student as first author. Therefore legal cases were brought that their work qualifies as regular employment, and that the student stipend system was simply illegal according to labor laws. Institutions and funding bodies reluctantly complied over the next decade or so, for fear of legal challenges and/or bad publicity.