The bottom line is this: The U.S. labor force is in the process of shifting from an era of rapid expansion to much slower growth. After 1970, the labor force grew at an annual rate of 1.6%, slowing to 1.3% by 2000 as women’s labor-force participation neared its peak. From 2000 to 2010, growth slowed to 0.8%, and the Labor Department projects a further decline to 0.7% during the current decade.

Beyond 2020, the downward trend continues. The Congressional Budget Office projects that the labor force will grow by only 0.4% annually between 2023 and 2038—one quarter of the rate between 1970 and 2000—and will increase at roughly the same rate in later years as well.

These developments, Mr. Gordon argues, foreshadow a fundamental change in the U.S. economy’s performance. Between 1970 and 2000, America enjoyed a “demographic dividend.” Because the labor force was rising faster than the adult population, raising hours of work per capita and allowing per capita GDP to rise faster than productivity. But now the dividend is turning into a tax. Because the share of workers in the population is declining, output per capita will grow more slowly than productivity. All other things being equal, this trend augurs much slower growth in Americans’ income and wealth.