There are two big questions about the job market: What's happening to the pace of hiring, and how much slack is there?

The answer to the first question is straightforward: Hiring has probably picked up. The Labor Department on Friday reported that the economy added 288,000 jobs in April, better than the 215,000 economists expected. 

More important, given the error bars around the monthly figures, the trend in employment growth has picked up. With the count for February and March revised up by a net 36,000, job gains have averaged 238,000 over the past three months, the strongest pace in over two years.

The question on slack is where things get complicated. The unemployment rate moved to 6.3% from 6.7% in March. In isolation that would suggest the pool of potential workers that employers can draw from is getting shallower.

But that was accounted for by a large drop in the labor force: people who are employed plus people without jobs who are looking for work. With an unusually large number of people outside the labor force, the unemployment rate is probably overstating how much the job market has tightened. But nobody is sure by how much.

So the Federal Reserve is in a bit of a fix. It can take heart in signs the economy is creating jobs at a faster clip, but it has no clear sense of how much labor-market slack remains to be reeled in.

Labor-force participation (the labor force as a share of the working-age population) has fallen to 62.8% from 66% before the recession. Factors including baby boomers retiring, skills erosion from long spells of joblessness, and young people staying in school longer mean it is unlikely the participation rate will go back to its old level. But what's the right level?

Fed Chairwoman Janet Yellen has underlined the slow pace of wage growth as evidence of slack; if employers don't have to pay workers more to fill job openings, they probably aren't straining much to find qualified workers. The implication is that she will take her cue from wages to determine whether the job market has tightened to the point that it is time to raise short-term rates.

Friday's report suggested that time is still a way off. Average hourly earnings of private-sector employees were flat in April from March, putting them just 1.9% above the year-earlier level.

The Fed's focus on wages could give investors fits. The monthly data can be volatile. In January and February, for example, hourly earnings ticked higher as winter weather pushed many lower-paid workers temporarily off payrolls and into the ranks of the unemployed.

So separating a real trend from what is merely noise can be a mistake-ridden exercise. And Fed officials are just as capable of making mistakes reading wage figures as investors are. When wages show signs of picking up, the Fed will have to balance the risk of moving too early with the risk of falling behind the curve.

While it is impossible to say yet which is more likely, investors can at least take comfort in knowing what will force such a decision.