They often are partially recycled material. But recycled paper isn’t like recycling aluminum or steel. There are limits to how often and how much of the cycled material you can add back to make useful paper products.
But paper towels can and does make great compost as most gardeners know. And a properly run landfill is a compost pile. But you need to keep the nasty garbage out.
I wash my hands for nearly a minute. But most of that time is spent trying to get those stupid no touch faucets to work.