When I was growing up in the Detroit area in the 70's and 80's, it seemed like many if not most jazz groups had electric bass. A lot of factors might have contributed: There were no string programs in the public schools due to budget cuts, so you got a bassist by finding someone who played trombone (or cello in my case thanks to private lessons) and handing them a Fender bass. Classical training (i.e., sight-reading) and a marketable instrument were a pretty hot combination.
At the same time, fusion was still pretty new, and played into the popularity of other musical styles as well. A lot of jazz groups went through a disco phase. And people were interested in louder music.
I couldn't think of a reason to play jazz on upright bass, so I played jazz on electric while taking classical lessons on cello and then later upright bass. What eventually happened is that I got hooked on upright, and it's become my main instrument.
Today, it seems that there's been a resurgence of the upright bass. Meanwhile, the music business has gone downhill, and the jazz scene has shrunk to the point where most of the work is being done by a pretty small handful of players. Truth be told, a lot of traditional and contemporary musical forms are kept alive solely by players and fans who are motivated by their love of the music.
I doubt that very many bassists take up the upright bass in response to demand from bandleaders who think that upright has the right look on stage. If you think about it, that's impossible, because upright takes years to learn. Rather, the people who play upright on stage, for the most part, are those who have propelled themselves into that position by following a passion for upright, and for jazz, bordering on insanity. That's what you're competing with. Do you love traditional jazz that much?
At the same time, it may be that electric has gone downhill in jazz, because fusion has gone from being the new kid on the block, to one of many mature genres with its own traditions (such as smooth jazz). Fusion isn't all that much younger than some developments in traditional jazz, and the upright bass as a jazz instrument isn't all that much older than electric. I'm not saying that fusion is dead, but traditional jazz isn't dead either.