It is often said that there are "too many" PhDs in the humanities and social sciences, which is why it is so difficult to find the traditional tenure-track job at a college or university. Too many people foolishly pursued their appetite for eighteenth century British literature, and now we're all screwed. Alternatively, the blame is placed on departments for admitting too many students, eager for the cheap labor of teaching assistants and graders and caring not a whit for the fact that these grad students will never find jobs -- in part because new waves of grad students have followed in their tracks, grading all those papers they might have graded as faculty members, if any jobs actually existed.
This story is a mix of truth and misconception. The question of too much or too little is not just a question of supply, but also demand. Some universities have attempted to curtail their production of PhDs by limiting the number of grad student admissions; the grad program I attended admitted about 20 students when I entered in 2003, and offered five years of funding to almost all of them, in part to counter a long-standing reputation that it admitted tons of students each year but only funded a select few. Whether this move to smaller graduate admissions has made an impact is hard to tell, as it appears to have begun in the early 2000s at many schools, and the effects would only have begun to be felt recently. In the meantime, the crash of college endowments and state budgets has created an extraordinarily negative climate for job-seekers (even by "normal" academic standards).
Long before the Great Recession struck, though, the ratio of PhDs to tenure-track jobs was dramatically lopsided. In a much-read and much lamented piece, Santa Clara University's Marc Bousquet challenges the idea that the problem lies on the PhD side of that ratio. As the author of an excellent book on the conversion of higher education to a low-wage labor model, How the University Works, he knows a thing or two about the Wal-Mart world in which so many beginning scholars find themselves. According to Bousquet, the real problem is that colleges have shifted more and more of their teaching and grading to low-paid, often benefit-less adjuncts and graduate students. In other words, it's an undersupply of jobs, versus an oversupply of applicants. Check it out:
History "Job Czar" Shuts Down PhD Production (PhD "Oversupply" Continues for Two Decades)