"This is clearly a problem with the writing category, which is heavily commoditized."
It is, particularly in the field of cr4ppy SEO "writing". People have come to expect a 500 word article for $2 or even less, which is just ridiculous. But I don't blame the clients at all.
I blame freelancers.
Clients have a business to run and whatever service we provide is just an input for them. They pay as little as they can for inputs, just like we do; I don't go searching for the most expensive word processing app, I search for the best value one. If idiots are willing to meet **edited for Community Guidelines** labour prices then clients will keep demanding them. If everyone asks a realistic price that's what clients will pay, because they'll have to. If it gets around that the only people who accept $2 for 500 words are those whose writing is actually worth $2 for 500 words - i.e. the illiterate - then all proper writers will be a lot better off. I've seen it said that "anyone can write". That's not true, and if the best rate you can get is 40 cents per 100 words I have some bad news for you; you can't write.
You are perfectly correct in this instance. Some of the lowish rate Filipino and Eastern European writers are very talented, and certainly deserving of higher rates, but, having proofread some of the lowest rate stuff, it's little more than a fractured and near-meaningless stream of words randomly stuck together.