While the failure rate of new-hires may affect the number of people in each class in the future, they certainly aren't the reason for the classes. We're losing FOs every day, whether it be upgrades or pilots simply going elsewhere. Now that the captains have started to leave, there are going to be even more upgrades.
The real problem that TSA is going to have is when they run out of FOs who are qualified to fly from the left seat, given that they're hiring so many people with such low time...