WRT to the traditional arts, one can imagine an oversupply of baccalaureates in philosophy and English literature, but was there ever a market demand for ethnic studies specialists? (I think not.)
My own view is that we are not observing a case of oversupply so much as that colleges are in the end stage of affirmative action. Imagine an academically rigorous institution, whether a college or a high school like Thomas Jefferson (discussed recently) or Stuyvesant. Exactly what do we expect to happen when students are admitted who have neither the talent nor the interest in academic work, especially of the math and science variety?
I think there only three possible outcomes, not mutually exclusive. One possibility is the affirmative actionees are turfed out. This probably happens to a limited degree, but expelling AA's defeats the purpose of affirmative action and is politically fraught, so I doubt there is much of it.
A second possibility is that academic standards are diluted. I think we see plenty of this, with TJ and Stuyvesant being lonely and beleaguered hold outs. The colleges, however, have done something else. The third option is to invent spurious courses of study, like the infernal ethnic studies programs which amount to playing intellectual tennis without a net. These are the programs that are populated with students who cannot add fractions or construct correct English sentences and who could certainly not survive real courses in philosophy, history, literature---to say nothing of math and science.
In other words, we are now observing not so much a market reacting to an oversupply as the unraveling of a fraud. We are watching an educational ponzi scheme collapsing.