Poor economic data has spread to the stock market. Maybe this will finally serve as a wake-up call.

The sudden weakening of the economic recovery is now undermining even the stock market. As usual, however, Wall Street is worried about profits and a possible double dip recession. But what the press and the Obama administration have not adequately taken up is how poor job and wage growth have been, even given the rate of GDP growth. And without more jobs and rising wages, we can forget a strong economy in the future.

It is time to make the record clear, especially as Austan Goolsbee leaves his post as Obama's chief economist. Goolsbee has spoken about the lack of family income growth being the biggest problem America faces. But there has been no passion in this White House about what is an alarming jobs performance. There has been some job growth in recent months -- until May, that is. But overall, the performance is abysmal and simply frightening.

That job growth, like GDP growth, would continue at a satisfactory rate was a wish and prayer for the administration. The inflation mongers, usually Republicans, have been still worse. The dominance of austerity economics in Washington will be seen as a historical folly of the first order. Cutting federal spending now is simply wacky.

Economist Andrew Sum and his group at Northeastern have done a close-up analysis of job and wage data. There has never been an economic recovery since World War II nearly as bad as this one.

Yes, there has been GDP growth, but it has almost all gone to profits, not pay. By most measures, there are still fewer jobs today than there were at the bottom of the recession. Just as disturbing, there has been no increase in wages. There are many measures of wages and salaries, but Sum and his group found that average hourly earnings of all private sector wage and salary workers were unchanged over the seven-quarter recovery. The typical or median full-time worker lost ground over this period. Hours worked grew only slightly.

And as we all know, unemployment remains very high at 9.1 percent. Underemployment -- those unable to find full-time work when they want it -- has about doubled, growing from 4 million to 8 million American workers.

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For the first time in more than sixty years, aggregate wages and salaries adjusted for inflation did not rise after seven quarters of recovery. What did rise was corporate profits -- and sharply. Here's the stunner, as Sum calculates: Pre-tax corporate profits in 2010 dollars rose by $464 billion and real wage and salaries in 2010 dollars fell by $22 billion.

Job growth out of the 1990-1991 recession was also slow. But not like this. Profits have never been as large a share of the growth of GDP.

This should fire up any Democratic administration. But at a recent presentation at the Harvard Club in NYC, Tim Geithner recently boasted about how much better the American economy recovered than did Europe's. That's only true if you don't look at jobs. And what is an economy ultimately, but jobs?

This disconnect between GDP growth and jobs is the economic issue of our time. Some of the jobs have been off-shored. Much of the slow job growth is due to companies' refusal to hire new workers because demand is so uncertain (not due to increased regulations). New technologies have a part to play. But it is hard to escape the fact that increasingly, corporations are in a battle with workers to minimize labor costs. Productivity growth is now the result of "efficiencies," not innovation. "Efficiencies" is now a euphemism for disregard -- and sometimes contempt -- for workers.

Those of us who took an economics course or two were taught to admire productivity growth. I remember fully believing that increases in productivity were usually accompanied by increases in the nation's standard of living. This was the capitalist defense of labor-saving machinery -- the industrial revolution. Throughout history it often worked, with some substantial help from progressive government programs that started in the late 1800s.

The relationship no longer holds, and government is nowhere to be found. We need more stimulus, an outright jobs creating program, tax incentives to keep jobs here, serious infrastructure and manufacturing investment by the government, and perhaps a reconsideration of free trade policies. As far as I can see, Washington just thinks we will blithely grow our way out of this.

Stock prices went up rapidly in this expansion along with profits. Maybe that's what makes Washington complacent on the jobs issue and turns its focus to budget balancing. As for the press, big finance also dominates their thinking. Now stock prices have been falling. This may prove the only wake-up call Washington can't ignore.

Roosevelt Institute Senior Fellow Jeff Madrick is the author of Age of Greed.

He who pays the most money for inside information makes the most money. The rest lose.

Nothing surprises me much more than when I read that trading on insider information is a victimless crime. In the wake of the conviction of hedge fund giant Raj Rajaratnam, the claim has come up time and again. In fact, it is entirely untrue. The victims are all those who sold Raj a stock or other security at a lower price than they might have if they had the same information he had. In other words, the victims are pensioners, mutual fund investors, bank trusts holders, and on.

It’s like what happened in the 1800s when some insiders knew the railroad had planned to build a track through a certain territory. They bought land from unsuspecting farmers, ranchers and maybe even the federal government on the cheap. That activity disgusts us. Same with stocks when the fund managers know about good earnings news to be reported the next day or a merger announcement to come.

What the details of the Rajaratnam scandal also shows is that he who pays the most money for inside information also makes the most money. Money begets money, the big get bigger. That’s a pretty good example of what’s happened over the past thirty years in American finance.

Now, when you can leverage that money up -- borrow to the hilt at low rates -- inside information really pays off. Many hedge fund managers don’t make money for the insights but for their sheer chutzpah. Meantime, market integrity is out the window.

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Wall Street’s always had some kind of advantage over the rest of us. The pros could often call someone up at a company to get an edge. But passing on outright inside information -- the kind that will move a stock price one way or the other substantially -- should clearly be illegal.

One of the more interesting facts about hedge funds is that, according to those who measure risk statistically by deriving ‘betas’ and ‘alphas,’ they do better on average than the amount of risk they take suggests they should. Mutual funds on average do not.

Some interpret this as proof of how astute the hedge funds are compared to other investors. The data could also be interpreted another way. That given their size and wealth, they have more information about company strategies and results, takeovers, and the trading patterns of the market. They may even be able to push prices their way and bail out before others catch on. Cornering markets can be against the law. How often does “mini-cornering” -- momentary attempts to buy enough supply to determine a quick price change -- go on? That’s perhaps the main reason why they do better than the risk they take suggests they should.

This is seedy stuff and there is no simple way to prevent it adequately. If such practices are common, it makes good sense for investors who have the money to sign up with hedge funds and get a piece of their unfair advantage.

On the other hand, some hedge funds are totally honest. How can we tell which ones make it on smarts, good instincts and genuine preparation? Only if the government aggressively cleans up the act. Fear of prosecution is perhaps the only effective weapon.

Meantime, good money flows to funds, often unwittingly, who exploit and take advantage—and that only distorts the efficient allocation of capital in America.

Roosevelt Institute Senior Fellow Jeff Madrick is the author of The Case for Big Government.