I don't believe that. (note that I am the guy who originally made the "zero pity" comment) Knowing how society developed from medieval times into the Renaissance is very valuable, especially from the point of view of someone who studies history of technology, markets, and means of production. Within that context, there is most definitely demand for professors of medieval studies.
The conversation really is about how there isn't enough demand for dozens of medieval studies experts every year. Perhaps there would be demand for a dozen every five years or so.
Your contention that we're producing a couple too many, ok, I can buy that. But the people in the article have jobs -- and it doesn't seem to stand that the depts in question would pay more for medieval history experts if there was a smaller pool of talent.
The bottom line is that if the price is low there is high supply relative to low demand. Econ 101 factors are always "at play". While a more advanced econ class may explain more complex pricing concepts, it really isn't necessarily here since this basically a classic econ 101 example.
What is even more interesting is that every time someone graduates with a history PhD they are in a position where they either go in to the field where their low paid professors already work or go to a different job. The ones that don't want food stamps take the second choice.
Those people who decide to sacrifice for the first 3 or 4 years out of the program and take jobs to get experience in a new field which can yield higher pay later will make more than those that stay in low demand history PhD positions in academia.
If you took a strict Econ 101 view of this, there would be no medieval studies professors in the whole country.