The Death of Academic Literary Criticism?

In his recent article appearing in The Nation, Associate Professor of English at Yale University, William Deresiewicz, argues that the field of (English) literary studies -- and English Departments themselves -- is "slowly dying," "losing its will to live" as fewer students study or major in English literature.  He also points to the profession's lack of an emerging theoretical school in nearly 20 years as well as a dwindling job market.

Despite a poor job market, Deresiewicz notes that the number of "'service'" positions - Rhetoric & Composition, Creative Writing, Technical Writing, and Communications - seem to dominate the Modern Language Association Job Information List. 

Are English Departments becoming too oriented to the teaching of writing as opposed to the teaching of literature?