Congress could give fitness waivers to more troops as it targets high-demand skills

Part of it is modern society. Younger generations are often more sedentary on average than their predecessors. It is not only in the US, stories of unfit military recruits in Britain and China also exist. Physical education and athletic activity need to be re-emphasized in schools along with academics.

The dwindling pool of people is only part of the issue.

People actually have to want to join. What does the military offer that makes it competitive to the outside world (having served we know the answer)?

Yeah. I'm here at Great Lakes Naval Station I see how many fail the final fitness test.
I'm a fat old disabled Veteran and I can pass the test.