See sibling reply[1]. If you can't make much as a regional pilot, that sounds like supply swamping the demand. But if you need all those hours to be a different kind of pilot, that may translate into a shortage of that kind.
It's more like a sticky market effect than it is a surplus of supply. When I worked in the aviation industry 5 years ago the problem was education costs had increased rapidly while entry-level wages have largely stayed the same. This is the same trend as the overall market, but in aviation the cost-wage differential was especially large. Airlines began to see the the number of college-age, young students entering the pilot industry start to fall. Additionally, the pipeline for new private-sector pilots started to shift: fewer students entered high cost private flight schools while more enlisted in the Air Force which offered better incentives and (more or less) free training at the cost of a 4 year military commitment.
This squeeze led to majors upping their compensation for tenured employees in order to encourage them to stay. This is why Senior Captains have seen increases to their average compensation while entry-level pilots at regionals haven't seen much change (regionals often operate on shoestring margins). This, in the short term works, and even now it's part of the reason that Pilots at majors end up having longer careers at the same carrier than average private sector industries. The benefits in scheduling and pay that they accrue the longer they are at a single airline are some of the strongest employee retention benefits of any industry today. Perhaps not as strong as the pension benefits of the 50's but certainly stronger than Software Engineers which have seen decreasing average employment duration in recent years.
This means that while potential new pilots have been choosing alternative carreers and older pilots stay longer, the age distribution of pilots has become unevenly distributed. There are a lot of older-aged pilots being paid a lot, but there have been overall less pilots entering the industry.
But here's the catch: Airline pilots are one of the only professions which have federal regulations governing age eligibility. That is, pilots must retire at age 65 according to the FAA. This age requirement was increased from 60 back as recently as 2007:
Point is there is an aging pilot population which, literally, will age out of the profession and not enough younger pilots to fill the gap.
At any rate, the pilot crunch is a really interesting market situation and I haven't been in the industry for 3+ years so my perspective is likely dated.
