For a few years, he started checking the median age of physics professors, and noticed it went up every year instead of down. Tenured profs decided to stay in their seats instead of retiring, and there were no new positions being created for young professors. That was his indication to get out (this was during the mid 90s).
The real crux of the problem is that modern PhD programs were originally designed post WW2, in the era of the GI bill and fast expansion of college education where there was high demand for new professors. That's no longer the case, but we still train PhDs as if they would get a job even though most won't.