I've been having my squadmates auto level-up just out of laziness. But I've been noticing my squadmates are severely underpowered compared to the character I'm playing... so perhaps I should reconsider?

What do you guys do?

You should level up them by yourself.
In "The Sith Lords" there are moments in which just control them without your main character and it would be better if they could do some stuff as well as the main character.