I'd say it is something like that example, Pointshoot.
There are millions more guns in folks' hands these days. Just like there's millions more television sets. But several things conspire against having a neighborhood gunsmith employed to tinker with them.
For one, the products themselves are generally better. They meet folks expectation and needs more readily out of the box. They largely work fine. They're more ergonomic, and they are more accurate right off the shelf. They also are increasingly modular and user-serviceable. Hundreds of operations that would be a gunsmith's bread-and-butter 30 years ago are now easily handled by the average end user at his own kitchen table. (The single most common rifle in America can be built from a bare receiver to a read-to-fire battle rifle in an hour, sitting on your couch, if you don't mind a few "dings" in the coffee table.
)
Plus, shipping has changed a lot. Remember how everything you might order was "
please, allow six weeks..."? Now folks expect the factory service department to handle anything that wasn't perfect about their new gun, and have it back to them in two weeks or even less. Why take it to the local guy?
The guys who are really doing well are often doing quite intensive stuff. Like Bowen, and Yost, and Turnbull, Gemini Customs, and Ford's refinishing, and Simmons' Guns, etc. These guys are out there, and do awesome stuff. But they've really found a niche and then made their own legends based on the very high quality of their work, and the universally high quality of the various craftsmen who work under their banner. (i.e.: TIG welders, polishers, case-hardening experts, barrel regulators/solderers, action-work guys) and someone with the vision to hold all those crafts together into a distinct, signature product.
I'll add another point. Back in the 40s, 50s, 60s, and 70s there was a resource that we don't have any more: The super-cheap military surplus firearm that was very good "breeding stock" for high-end custom guns. Mausers, Springfields, 1917s, 1911s, S&W wheelguns, etc. (to say nothing of the "worthless" old 19th century lever-action and SAA type arms no one wanted any more) all available for nearly free, and available for honing skills on, and making masterpieces out of. Then, consider taxes, environmental regs and requirements, OSHA, and all the other little nibbles that take profit and time away from the craftsman. These days there's a totally different dynamic about guns. In some ways it is a lot better.