I think you're misunderstanding the challenge. Teaching first year students doesn't require Ph.D.-level knowledge, but it requires more teaching experience and skills than teaching later levels: The classes are larger; the students are less experienced at learning on their own; the students are new to the environment and less familiar with how to navigate it.

Large classes of novices are particularly sensitive to logistical and teaching errors. You make a question on a homework or exam a bit confusing, you have 400 students utterly perplexed who may not have the domain expertise to know it's the question that's broken.

At Carnegie Mellon, our teaching-track faculty generally own the large intro classes for this reason. They're the best we have at the process of teaching & education. It's the exact opposite of a side job. You want people who are deeply expert and passionate about teaching so that you don't completely botch the job, because the opportunities to botch it are huge.

It also takes a lot of expertise to understand why certain subjects are introduced in intro courses, and to frame those ideas in a way that will help those students learn more advanced topics.

It doesn't require Ph.D. level knowledge, but it helps a lot, especially when you're talking to one of those few students with more and deeper questions about the subject.

If you’re representing the college, how do you know the individual you’re about to hire has sufficient knowledge to both teach the material and cover any questions on the material students may raise.

Just like any other skilled job, there is an interview process.