Sure it does. If everybody overhired, then nobody needs to hire now. And the few places that do are inundated with all the laid-off job seekers, so odds on getting hired at one of them are very low.
At my employer the overhiring was in areas where there wasn't actually a business case. For example they staffed an entire internal team to build a unified portal between all of the software systems the company acquired through acquisitions. That team produced nothing and at great expense. They got laid off last year, and the funds re-allocated toward hiring in areas that produced revenue or reduced expenses.