Until recently, I was primarily under the impression that the typical "adjunct" instructor was someone with a Ph.D. who'd failed to get a tenure track job. New Modern Language Association President Michael Bérubé says this isn't true and wants people to stop repeating it:
As for that “glut of Ph.D.s” driving down NTT wages: I am beginning to get the sense that everyone and her brother believes that NTT faculty are made up of Ph.D.s who didn’t get TT jobs. Yes, of course, some of them are. But most of them are not. Though it comes as a surprise to many people (it certainly surprised me), we are talking about two wholly distinct labor markets. The tenure-track market is national, and is populated mostly by Ph.D.s; the NTT market is local, and is populated chiefly by holders of the M.A. or M.F.A. So, once again with feeling:
"according to the 2004 National Study of Postsecondary Faculty, 65.2 percent of nontenure-track faculty members hold the M.A. as their highest degree—57.3 percent in four-year institutions, 76.2 percent in two-year institutions. There are many factors affecting the working conditions of adjuncts, but the production of PhDs isn’t one of the major ones."
This is an important point, but it seems to just push the question at issue back one stage. Rather than universities overproducing Ph.D.s based on overpromising to prospective Ph.D. candidates about their likely career outlook, it seems that universities are overproducing M.A.s and M.F.A.s based on overpromising to prospective MA students about their likely career outlook. University humanities departments are a funny kind of labor market, because they're in the business of producing a product (people with advanced degrees in the humanities) of which they are also the only substantial purchasers. Tenure-track professors are concerned about the low wages and poor working conditions of nontenure-track faculty for both self-interested and altruistic reasons, but the situation seems clearly driven by a high supply of people qualified for nontenure-track teaching positions—with the qualifications being handed out by departments controlled by tenure-track professors.
Another factor here is that the United States is strangely restrictive about who's allowed to teach in K-12 schools. A freshly minted M.F.A. from Yale would generally be allowed to teach university-level courses but not to teach high school English in Connecticut.