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Andrew Harnik/AP

It's all but certain the Janet Yellen and the FOMC will raise interest rates this afternoon, and the decision will tell us some important information about how Fed officials see the economy and the U.S. labor force.

Why this matters: Economists think severe recessions are particularly painful because the inflict long-term joblessness on workers, a state that leads to erosion of skills employers demand. It's a vicious cycle that creates a class of degraded workers for whom indefinite joblessness is a common fate. Rising interest rates now may create an economy that leaves those workers behind.

The Fed has kept monetary policy loose, hoping that demand would grow high enough that employers would take a chance on these workers and even invest in training that could get them up to speed. And it's worked:

Expand chart
Data: Bureau of Labor Statistics, Federal Reserve Bank of St. Louis; Chart: Andrew Witherspoon / Axios

A smaller share of those out of the labor force are finding jobs these days however, even with the Fed's policy of easy money. This, plus rising measures of wage growth, has convinced many observers that even though the labor force participation rate among workers 25-54 remains low, many of these folks are probably lost causes to the effects of the Great Recession. The Fed, by embarking on a course of rate hikes, is implicitly endorsing this view.

A good call?: One side says no — what's the point of raising rates when the labor market is improving but inflation is not yet a problem? The other says yes — if the Fed waits to see inflation, it will be too late, possibly forcing the Fed to trigger a recession as it accelerates its plans to raise rates.

Go deeper

1 hour ago - World

Army to award Purple Hearts to troops injured in Iran missile attack

Damage at Ain al-Asad military airbase housing U.S. and other foreign troops in the western Iraqi province of Anbar in January 2020. Photo: Ayman Henna/AFP via Getty Images

The Army has approved 39 more Purple Hearts for U.S. soldiers wounded in an Iranian military ballistic missile attack on an Iraq base in January 2020, the Army Times first reported Wednesday.

Why it matters: Most of these soldiers sustained brain injuries, per the Army Times. Then-President Trump dismissed their injuries at the time as "headaches" and "not very serious," sparking backlash from some veterans groups.

Scoop: U.S. begins denying Afghan immigrants

Afghan refugees on a bus bound for temporary housing after arriving in Greece. Photo: Byron Smith/Getty Images

The Biden administration has begun issuing denials to Afghans seeking to emigrate to the United States through the humanitarian parole process, after a system that typically processes 2,000 applications annually has been flooded with more than 30,000.

Why it matters: Afghans face steeper odds and longer processes for escaping to the U.S., despite the earlier sweeping efforts by the Biden administration to assist its allies. Immigration lawyers and advocacy groups say the government has set untenable barriers to a safe haven in the U.S.

4 hours ago - Politics & Policy

Dems invoke Robert Byrd to sell Manchin on Senate rules changes

Photo illustration: Shoshana Gordon/Axios. Photos: Diana Walker, Chip Somodevilla/Getty Images

A small group of Senate Democrats is privately invoking the legacy of late West Virginia Sen. Robert Byrd in an effort to sway Sen. Joe Manchin (D-W.Va.) to support their plans to change the chamber's rules, Axios has learned.

Why it matters: Manchin — who holds Byrd's Senate seat — has often referenced his predecessor's strong moral conviction and insistence on preserving the Senate as an institution, as justification for some of his tough positions.