Kids these days do not have much unstructured time. They are in sports, band, clubs, and various activities at each level. The 16-17 year olds have jobs and cars, and perhaps you have noticed the 2-3 hours of homework every night.
Scouting is not so much a demanding activity; just one night a week and one weekend a month. Many parents provide their kids with balance to include all of these opportunities. It is stressful, but doable. The activities and time pressures are the excuse, not the reason to quit or avoid scouting.
The real reason as I see it: just the look on the parents' faces when asked to volunteer their own time to help, told that their son must volunteer service hours, told that their son must also work fundraisers, and then told about the equipment that is required to participate on some outings in addition to the regular fee. Nothing turns the parent away faster than asking for their time too, and then asking for more money.
Life is simple when you just pay for a sport, drop the kids off at practice, enjoy the kids successes on the field and blame the coaches for the failures. A parent cannot enjoy these benefits in scouting. The successes of the scout belong to him, and the parents must endure the complaints of failure, which also belong to the scout.
In a world where its all about "me", its too easy to dismiss scouting. "It takes too much time" is the excuse I hear. Too much of the parents time and not enough parent award is what I believe to be the real truth. Its not the other activities that are being dropped, and its not the other activities that are asking the parents to contribute time. Sacrifice and giving, a real value taught in scouting, is rare and getting even more so.
As for recruitment, the wonderful efforts of the ACLU have frightened the schools to all but ban any semblance of scouting in or around their facilities. This makes it very difficult to attract more boys into the program.