At my last rotation, the psychiatrist said the exact opposite of your dad. He said there is already a massage shortage of psychiatrists and the supply is going to get even smaller when the baby boomers retire since they comprise a large portion of the current psychiatrists.
Also, I think medical students will always avoid psychiatry to some degree because of the nature of the field regardless of it's compensation and lifestyle. Yes, I'm aware that in medicine, demand increases with increased income. No one wanted to do radiology 15 years ago but when the demand (and money) for radiology escalated, the field became competitive. I don't see the same analogy occuring with psych because many people have an aversion to working the mentally ill regardless of how much it pays.
Lastly, our culture has changed and is more accepting of psychiatry. In the past, it was taboo to see a psychiatrist or a therpaist. Now, it's commonplace and people are no longer afraid to admit they see someone or inform people they are taking antidepressants or ADHD medication. In the past, people were afraid to see a psychiatrist out of guilt that they might be crazy or unaccepted. Now, you see professionals see a psychiatrist regularly for their anxiety, depression or lack of focus. Parents have changed too. Now, parents seek psychiatrists for common problems like children misbehaving or acting out whereas in the past, parents would have probably just cracked the whip. Schools are also getting involved and will suggest seeing a psychiatrist for attention problems or learning disabilities if a child is underachieving. Again, in the past, schools would have probably just expelled them or moved them to another school.
Psychiatrists and psychologists are taking a team approach to mental health care. Many psychiatrists refer their patients to psychologists for CBT while they manage their drug regimens. This works well for both parties as many psychiatrists do not enjoy psychotherapy and would rather see their patients as clinicians managing their prescriptions and physical health (monitoring their vitals in regards to medication etc.). There are also many new advancements in neurology and psychiatry so that psychiatrists have options aside from just psychotherapy such as brain mapping. And like someone mentioned above, psychologists prefer psychotherapy since that's where the bulk of their training lies. There is not an adversarial relationship among psychiatrists and psychologists as I once presumed. And the states that allow psychologists prescription power are New Mexico and Louisiana which have severe physician shortages let alone shortages in psychiatrists, so you can imagine why those states had no choice but to empower psychologists. I don't see this trend occuring in states with large metropolitan areas that have enough physicians. Sure, this trend might spread to states like South Dakota, Montana, West Virginia, Kentucky Wyoming and North Dakota but I doubt it will occur in California, New York, Florida, Pennsylvania, Illinois, Ohio, Michigan and Texas. The large and powerful physician lobbies in those states would not allow it.
Lastly, the majority of patients today seek psychiatrists with the intent of being put on medication whether that's an antidepressant or a psychostimulant. For example, many parents will bring their children to see a psychiatrist with the purpose of acquiring Ritalin or other stimulants. Patients are aware that psychologists lack the ability to prescribe medication so they make appointments to see psychiatrists.This isn't like 20 years ago. People today are well informed and read up about medication on the internet. There are drug companies that advertise antidepressants and other psych-related drugs on television that entice consumers to make an appointment to acquire a prescription for that particular drug. Again, those patients are not going to make appointments with psychologists.
The one concern I do have is that psychiatry could potentially be the hardest hit by medicare's lower reimbursements due to the fact that there aren't any procedures in the field.