The jobs market in the U.S. seems to be going through an identity crisis at the moment, undecided if it is too strong or too weak. And that’s a problem because that is one of the two formal mandates the Fed must address (the other being inflation), so nailing down its present status is crucial to effective monetary policy.

To hear most of the current Presidential candidates tell it, the jobs situation is a disaster, characterized by too many low-paying jobs and not enough high-paying ones. However, during this week’s Republican debate several of those same people said that the minimum wage should not be raised since that would result in jobs being eliminated to offset the cost of higher salaries. The solution to this conundrum, in their view, is not to raise the minimum wage but to create better paying jobs.

That certainly makes sense logical sense, but unfortunately logic does not always go hand-in-hand with economic reality. Of course, the fatal flaw in that reasoning is that more better paying jobs depends on a number of variables outside the control of the executive office. Some of the candidates astutely observed that the long term solution is to treat the disease, i.e., slow economic growth, and not the symptom of slow wage growth.

To a certain extent, declining unemployment should help solve the problem since employers would be competing for employees from a shrinking pool of workers. And unemployment is dropping, at least as it is officially tracked by the government, down to 4.9% at most recent count. Last week’s jobs report supports that trend, with a much bigger than expected increase in non-farm jobs.

But hold on, say the naysayers, those figures are misleading since they don’t include people who have dropped out of the work force and are no longer counted as unemployed, having given up looking for a job altogether. By that measure (referred to as the “U-6” unemployment rate), the real number is 9.6% according to the Bureau of Labor Statistics (or a much higher 13.8% as calculated by the Gallup Organization).

Regardless of which U-6 number you choose to believe, the gap between that number and the official U-3 unemployment rate is what most experts consider to be the true indicator of how much slack there is in the workforce, which in turn dictates the extent to which employers feel compelled to raise wages to attract and retain employees. And by that measure the U.S. jobs markets is improving, but still worse than it was prior to the Great Recession.

As of last month the difference between the U-6 and U-3 unemployment rates was nearly 5%, well above the 3% to 4% range where it sat from 1997 thru 2007. Not surprisingly, that decade also witnessed a meteoric rise in home values fueled by a large population of gainfully employed Americans still unafraid of borrowing as much money as possible to afford the nicest house available.

This time is different. As the old saying goes, “once bitten, twice shy,” which describes the way many Americans feel about their job security, and the future health of the overall economy. They don’t trust it to last, and don’t believe they would be exempt from the financial pain that accompanies an economic slowdown. For that reason they are reluctant to embrace making large financial commitments as readily as they once did.

That mindset affects investor psychology, a subject my colleague Bob Frick has often written about in this column, so I won’t delve into that here other than to point out that when it comes to the stock market, perception can become reality when enough people act on them. And right now a lot of people seem to believe that things are getting worse, and not better as the improving employment data suggests.

It remains to be seen if that pessimism is warranted. It appears likely the Fed will begin raising interest rates next month, which means it no longer views deflation as an immediate threat to our economy. Normally that would be construed as good news, signifying the next uptick in the economic cycle is beginning.  And if that, in fact, turns out to be the case, then we should see a comparable uptick in wage growth without the assistance of a higher minimum wage.