OK, this is only a half-serious post but there's no time even for a two-thirds serious one. How to improve the job market for literature people?
1) The Reality TV Option. For the best job on the market in a given year, produce a reality tv show. That is, use an American Idol format to narrow the field down to the dozen most viable candidates, then Survivor to get down to the three finalists, and then the Presidential race (a series of debates at peer universities and votes by profs and grad students) to decide the winner. The search committee could be involved in the first two stages in creative ways, but after that it's out of their hands.
This would publicize just how amazing the talent pool is in literary studies. The long time for it to develop would allow all kinds of looks at backgrounds of the various candidates, spark interest in the humanities more generally, and be much better for all involved than the usual process.
2) The Q-School Option. Author- and period-based professional organizations (among others) could put on late-summer conferences in which applicants (only those without and in search of a tenure-track job) can choose which of, say, 5 pressing questions in the field they want to address in their talk, narrow the participants down to the top 5 on each, spend a day discussing the answers proposed by the panelists on each question, rank the panelists at the end of the conference, and, eventually, publish a book of the winners' expanded and revised essays. The questions for the next summer's conference would be agreed-upon by the officers of the society after the conference and posted by early fall, so that everyone going on the market the following fall could have the academic year to prepare their papers and submit them in early summer. As an incentive to those who don't make the top 5, all papers from the top 30 applicants could be posted on a conference blog, opening them up to comments and feedback from the profession at large. [These numbers are customizable to the size of the organization, of course.]
This would help get attention to what the leaders of the organization see as the crucial issues in the field and help them indicate who among the not-yet-tenurable they feel most deserve jobs. With the late-summer timing of the conference and blog, candidates (in the top 5 or top 30) can include the results on their c.v.s and those who are invited to present at the conference would also benefit from the day devoted to their question and answers and the chance to interact with more established people in their field.
I'm sure others can come up with better ideas. Let's get creative, people!
[Update 1/30/08: Craig Smith at FACE Talk answers my call! And I got Around the Webbed by Inside Higher Ed for the first time evah. Just for the record, I wrote this on a computer in the day care center playroom imoto and I were hanging out in while onechan was in her yochien and revised it slightly when we got home. There's a lesson there somewhere.]