Cuts may stunt state’s growth

Higher worker bonuses and a strong technology sector helped the Massachusetts economy grow faster than the nation for the first three months of the year, but experts warned that federal budget cuts and the payroll tax increase are already taking a toll on the commonwealth.

"What the policy is doing is slowing the pace of our growth," said Michael Goodman, a public policy professor at the University of Massachusetts Dartmouth. "It's like driving around with the emergency brake on. You're still moving forward, but not as fast as you would like."

Massachusetts' real gross state product grew at a rate of 3.9 percent in the first quarter, outpacing the nation's 
2.5 percent growth rate.

In a MassBenchmarks report issued yesterday, experts said the state's solid economic growth from January to March was likely caused by "sizable" bonus payments made to workers in the financial and professional services sectors.

However, the state's professional, scientific and business services sector took a big hit last month with the loss of 3,400 jobs even as the unemployment rate dropped down to 6.4 percent. March marked the beginning of federal automatic spending cuts.

The state grew at an annual rate of 2.4 percent during the fourth quarter of last year while the United States posted a paltry 0.4 percent growth rate.

Federal budget cuts are already starting to slow the commonwealth's leading industries, including health care, higher education and research and development, experts said.

"The national and state economies are being strongly influenced by two opposing forces. On the one hand, growth in consumer demand is being supported by rising home prices, stock markets and job expansion," said Northeastern University economist Alan Clayton-Matthews, senior contributing editor of MassBenchmarks. "On the other hand, fiscal drag in the form of the payroll tax increase and federal budget cuts are slowing the economy. This fiscal drag could dampen growth by as much as 1.5 to 2 percentage points this year. And the continuing recession in Europe and an apparent slowdown in China are not helping matters."

Demand for the state's technology resources — information technology and medical devices — continues to give Massachusetts a growth edge over the nation, said Robert Nakosteen, an economics professor at the University of Massachusetts Amherst's Isenberg School of Management. However, the sector will "take a bit of a hit" as the year progresses because it is largely supported by government spending and contracts, he added.

"The state can't sustain this high rate of growth," Nakosteen said. "We're not in danger of a renewed recession, but the growth we've seen in the last quarter is not going to be sustained."

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Gov asks SBA for loans to those hit by bombing

Gov. Deval Patrick has called on the U.S. Small Business Administration to provide some relief in the form of low-interest loans for small businesses and private nonprofits affected by the Boston Marathon bombings last week.

In a letter, Patrick asked the agency to issue an Economic Injury Declaration for Suffolk County so that long-term and low-interest SBA loans would be made available to businesses and private nonprofits.

"Requesting this federal aid will help Boston and the commonwealth recover faster from the tragic events that unfolded at the marathon," Patrick said. "I urge the Small Business Administration to approve our request quickly to help the small businesses that keep our commonwealth strong rebuild."

In order to receive this federal assistance, the commonwealth must show that businesses suffered substantial economic injury.

If the agency issues the declaration, emergency officials will coordinate with the USSBA and Boston's Office of Emergency Management to have specialists available in the city to work with businesses that may be interested in the loans, Patrick said.

Businesses were gradually allowed to reopen on Boylston Street this week, several days after two bombs went off killing three people and injuring hundreds.

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AP hack may prompt Twitter to start two-steppin’

This week's hack of The Associated Press' Twitter account rocked Wall Street and may force execs at the private San Francisco-based social media darling to address online security issues before another major embarrassment occurs.

While no security system is foolproof, experts say Twitter could begin by introducing a two-step authentication process to avoid a repeat of Tuesday's tweet, which claimed that two bombs had exploded at the White House, injuring President Obama.

The tweet sent the stock market tumbling 150 points before the White House reassured the nation that it was a hoax. But it wasn't the first time a news organization's Twitter account had been compromised.

Days before the AP incident, CBS' "60 Minutes" account also was targeted by hackers, another instance that might have been avoided had Twitter implemented the kind of two-step authentication that Google, Microsoft, Facebook and Apple already offer.

In addition to typing in your username and password to get access to your account, those systems typically also require you to enter another piece of information, such as a PIN that's sent to you in a text message.

"I wouldn't necessarily use this method to launch nuclear weapons, but it makes me feel pretty close to perfectly safe," said Chester Wisniewski, senior security advisor at Sophos, a global computer-security firm. "It's a minor inconvenience for peace of mind."

Even a flawless security system, however, doesn't guard against the perils of bad reporting, said David Gerzof Richard, president of BIGfish Communications and professor of social media and marketing at Emerson College.

"If the tweets they're sending out are incorrect," he said, referring to some overanxious reporting in the days following the Marathon bombings, "then a two-step authentication doesn't do much good."

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Cambridge DNA whisperers

Cambridge-based Gen9 has landed another $21 million to keep pushing the limits of synthetic biology, a cutting-edge field where scientists "play God" by creating customized DNA — the building blocks of life — for a variety of different industries.

As part of the deal, Agilent Technologies of Santa Clara, Calif., gained an equity stake in Gen9 and will join its board of directors as the Bay State startup uses the money to increase the scale of its operations and ultimately to make new products, Gen9 CEO Kevin Munnelly said.

"Gen9 was founded to significantly increase the world's capacity to cost-effectively generate high-quality DNA content for use in transforming industries ranging from chemical and enzyme production to agriculture, biofuels, pharmaceuticals and even data storage," Munnelly said. "Agilent's investment is a powerful validation of our proprietary BioFab platform, and we look forward to working closely with them to further innovate around our manufacturing capabilities and build Gen9 into the leading high-throughput supplier to the synthetic biology marketplace."

The investment will also help Gen9, whose early backers include New England Patriots owner The Kraft Group, to increase its 22-person staff by about 50 percent this year, he said.

The company's clients include large chemical, agricultural and pharmaceutical companies that are "starting to realize synthetic biology can reinvent the way they do business," Munnelly said. "You can actually design what you would like these gene products to do. … You can get very inexpensive genetic constructs on a massive scale."

That kind of power is a double-edged sword, which theoretically could be used to create weapons of mass destruction, he admitted.

Because the field is relatively new, Gen9 is left to "do a lot of self-policing," Munnelly said. "We don't supply people who are looking to do those things."

Agilent makes instruments for high-end measurement and testing, including testing of water for contaminants and of fruit for pesticide residue.

"We anticipate an explosion in the use of biological machines," said Neil Cook, vice president and director of Agilent Laboratories, referring to living organisms such as bacteria or yeast, which can be used to produce everything from medicines to car fuel.

"To make molecules at will is going to fundamentally change the way we see chemical synthesis in the future," he said.

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Survey: Small businesses back minimum wage rise

NEW YORK — Small business owners support raising the federal minimum wage because they believe it will help the economy and, in turn, enable small companies to hire more workers.

That's the finding of a survey released Wednesday by the Small Business Majority, a group that advocates on behalf of small businesses. Two-thirds of the 500 owners in the survey supported an increase from the current minimum hourly wage of $7.25, coupled with an annual adjustment for inflation. Eighty-five percent said they pay their employees more than the minimum.

The survey's findings were at odds with the stand against a higher minimum wage taken by small business advocacy groups including the National Federation of Independent Business and the National Small Business Association. Retailers, fast-food restaurants and other small businesses that pay the minimum wage say an increase would cut into their profits. Some say that would prevent them from hiring or expanding.

Nearly two-thirds of the owners in the Small Business Majority survey said a higher minimum wage would benefit small businesses by increasing consumer spending and, in turn, allowing small companies to retain or hire more employees.

The minimum wage has become an issue since President Barack Obama proposed during his State of the Union address in February that the federal minimum be raised to $9 from $7.25 an hour. Democrats in Congress introduced a bill to raise the minimum to $10.10 an hour in March, but it was rejected by the House.

Support for a higher minimum wage cut across political party lines in the survey. Forty-six percent of the small business owners identified themselves as Republican, while 35 percent said they were Democrat and 11 percent said they were independent.

The survey was taken March 4-10, nearly a month after Obama proposed a higher minimum.

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Asia stocks up on US company earns, home sales

BANGKOK — An increase in new U.S. home sales and strong corporate earnings across a range of industries lifted investment sentiment in Asia, where most stock markets rose Wednesday.

Luxury handbag maker Coach, Lockheed Martin and DuPont reported results that were better than analysts expected. Netflix, which streams TV shows and movies over the Internet, announced profits that delighted investors. Meanwhile, the U.S. government reported that sales of new homes rose 1.5 percent in March, adding to evidence of a sustained housing recovery.

That offset results of a survey into manufacturing conditions among the 17 European Union countries that use the euro. The monthly purchasing managers' index fell to a 3-month low in April.

"Sentiment was upbeat yesterday as solid US earnings and new home sales data helped equities shrug off disappointing PMI data earlier in the day," Gary Yau at Credit Agricole CIB said in a commentary.

Japan's Nikkei 225 index jumped 1.3 percent to 13,703.62. Hong Kong's Hang Seng rose 1 percent to 22,014.90. South Korea's Kospi rose 0.8 percent to 1,933.83. Australia's S&P/ASX 200 jumped 1.4 percent to 5,087.90.

On Wall Street, corporate earnings propelled all three major indexes higher. The Dow Jones industrial average climbed 1.1 percent, to close at 14,719.46. The S&P 500 index rose 1 percent to 1,578.78. The Nasdaq composite rose 1.1 percent to 3,269.33.

Later Wednesday in the U.S., consumer goods giant Procter & Gamble, drug maker Eli Lilly and Boeing will release earnings. United Parcel Service, Exxon Mobil and Amazon are among the corporations that will do so on Thursday.

Benchmark oil for June delivery was up 20 cents to $89.38 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 1 cent to close at $89.18 a barrel on the Nymex on Tuesday.

In currencies, the euro rose slightly to $1.2993 from $1.2991 late Tuesday in New York. The dollar fell to 99.30 yen from 99.44 yen.

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Flight delays pile up amid FAA budget cuts

NEW YORK — Flight delays piled up across the country Monday as thousands of air traffic controllers began taking unpaid days off because of federal budget cuts, providing the most visible impact yet of Congress and the White House's failure to agree on a long-term deficit-reduction plan.

The Federal Aviation Administration kept planes on the ground because there weren't enough controllers to monitor busy air corridors. Cascading delays held up flights at some of nation's busiest airports, including New York, Baltimore and Washington. Many operations were more than two hours behind schedule.

At one point, the delays were so bad that passengers on several Washington-New York shuttle flights could have reached their destination faster by taking the train.

Nearly a third of flights at New York's LaGuardia airport scheduled to take off before 3 p.m. were delayed 15 minutes or more, according to flight-tracking service FlightAware. Last Monday, just 6 percent of LaGuardia's flights were delayed.

The situation was similar at Washington's Reagan National Airport, in Newark, N.J., and in Philadelphia, with roughly 20 percent of flights delayed.

At airports, Monday is typically one of the busiest days, when many high-paying business travelers depart for a week on the road. The FAA's controller cuts — a 10 percent reduction of its staff — went into effect Sunday. The full force was not felt until Monday morning.

Travel writer Tim Leffel had just boarded a US Airways plane from Charlotte, N.C., to Tampa, when the flight crew had an announcement.

"They said: 'The weather's fine, but there aren't enough air traffic controllers,'" Leffel said. Passengers were asked to head back into the terminal. "People were just kind of rolling their eyes."

His flight landed one hour and 13 minutes late.

One thing working in fliers' favor Monday was relatively good weather at most major airports. A few wind gusts in New York, snow in Denver and thunderstorms in Miami added to some delays, but generally there were clear skies and no major storms.

However, the furloughs will continue for months, raising the risk of a turbulent summer travel season. And the lack of controllers could exacerbate weather problems, especially spring and summer thunderstorms.

There's no way for passengers to tell in advance which airport or flights will experience delays.

FAA officials have said they have no choice but to furlough all 47,000 agency employees — including nearly 15,000 controllers — because the agency's budget is dominated by salaries. Each employee will lose one day of work every other week. The FAA has said that planes will have to take off and land less frequently, so as not to overload the remaining controllers on duty.

Critics have said the FAA could reduce its budget in other spots that wouldn't delay travelers.

"There's a lot finger-pointing going on, but the simple truth is that it is Congress's job to fix this," said Rep. Rick Larsen, a Washington Democrat and member of the House aviation panel. "Flight delays are just the latest example of how the sequester is damaging the economy and hurting families across the country."

Some travel groups have warned that the disruptions could hurt the economy.

"If these disruptions unfold as predicted, business travelers will stay home, severely impacting not only the travel industry but the economy overall," the Global Business Travel Association warned the head of the FAA in a letter Friday.

Deborah Seymour was one of the first fliers to face the headaches. She was supposed to fly Sunday night from Los Angles to Tucson, Ariz. First her 9:55 p.m. flight was delayed for four hours. Then at 2 a.m., Southwest Airlines canceled it.

"It's pretty discouraging that Congress can't get it together, and now it's reached the point that we can't get on an airplane and fly," Seymour said.

On some routes Monday, it was actually faster to take ground transportation. The 8 a.m. US Airways shuttle from Washington to New York pushed back from the gate six minutes early but didn't take off until almost 10 a.m.

The plane landed at 10:48 a.m. — more than two and a half hours late. If travelers instead took Amtrak's 8 a.m. Acela Express train from Washington, they arrived in New York at 10:42 a.m. — four minutes early.

Normally, there are 10 air traffic controllers at a regional facility handling arrivals for Los Angeles International Airport. On Sunday night, there were just seven, according to Mike Foote, a local union president with the National Air Traffic Controllers Association. A low layer of clouds late compounded the situation.

In such weather, two controllers do nothing but watch planes as they descend below 15,000 feet to ensure they don't veer off course. That allows 68 to 70 planes to land each hour. Because of the furloughs, there were no controllers to do that Sunday, dropping the arrival rate to 42 planes an hour, Foote said.

United Airlines said there were "alarming pockets" of delays and warned that if a solution isn't found, the problem could "affect air travel reliability for our customers."

Delta Air Lines cautioned travelers to expect delays in New York, Philadelphia, Fort Lauderdale, Fla., Chicago, San Francisco, Los Angeles and San Diego.

Many flights heading to Florida were seeing delays of up to an hour. By late Monday, delays into Los Angeles were expected to average three hours.

Having just one fewer controller to handle arrivals to Newark Liberty International Airport can result in the airport being unable to use a relief runway to handle peak traffic, reducing arrivals by about 15 percent, said Dean Iacopelli, a union official at an FAA regional facility for New York's airports.

"It is not just telling one out of 10 people to stay home and so one out of 10 planes get delayed. It's much more complicated that," Iacopelli said.

Prior to the furloughs, if a controller called in sick, there were enough people to take on the extra work, Iacopelli said, or somebody could be asked to work overtime. Now that isn't possible.

The FAA has also furloughed other critical employees, including airline and airport safety inspectors.

In a letter to the FAA Friday, Delta general counsel Ben Hirst asked the agency to reconsider the furloughs, saying it could make the cuts elsewhere and transfer funds from "non-safety activities" to support the FAA's "core mission of efficiently managing the nation's airspace."

Two airline trade associations and the nation's largest pilots union filed a lawsuit Friday asking the U.S. Court of Appeals to halt the furloughs. No hearing date has been set.

The two airline associations — Airlines for America, which represents major carriers, and the Regional Airline Association — are asking the court to place a moratorium on enforcement of the Department of Transportation's three-hour limit on the length of time airlines can keep passengers waiting inside planes on the tarmac without giving them the opportunity to return to a terminal.

Airlines can be fined as much as $27,500 per passenger for violating the limit. The Transportation Department said it is reviewing the industry's request.

___

Associated Press writers Joan Lowy in Washington and Christopher Weber in Los Angeles contributed to this report.

___

Scott Mayerowitz can be reached at http://twitter.com/GlobeTrotScott .

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Reuters editor charged with hacking: I was fired

SAN FRANCISCO — A Reuters deputy social media editor accused of conspiring with hackers to deface a Los Angeles Times story said Monday he had been fired.

His dismissal came the day before 26-year-old Matthew Keys was scheduled to appear in federal court for the first time on the felony charges. His attorneys say he plans to plead not guilty.

Federal prosecutors allege Keys provided the hacking group Anonymous with login information to access the computer system of The Tribune Co., the Times' parent company.

According to a federal indictment handed down last month, a hacker identified only as "Sharpie" used information Keys supplied in an Internet chat room to alter a headline on a December 2010 Times story to reference another hacking group.

Tribune also owns a Sacramento television station Keys had been fired from months earlier.

Keys has said he did not commit the crimes he's accused of. He did not immediately respond to a telephone message seeking comment Monday, but he did post several online messages saying Reuters had not fired him as a result of the indictment.

"Just got off the phone. Reuters has fired me, effective today. Our union will be filing a grievance. More soon," he tweeted to his more than 35,000 followers.

He later tweeted a copy of a "final written warning" he said he received from Reuters in October, which admonished Keys for mocking a Google executive from a fake Twitter account he had created, saying the action demonstrated a "serious lapse of judgment and professionalism that is unbecoming of a Reuters journalist."

His attorney Jay Leiderman confirmed the firing, but said he would not comment on it because the Newspaper Guild was representing him on the matter. He added that "there is an appeals process that I will have to let play out."

Peter Szekely, Secretary-Treasurer of the Newspaper Guild of New York, confirmed the union would be representing Keys.

"Our contract with Thomson Reuters prohibits management from dismissing anyone without just and sufficient cause. We don't believe the company has the required justification here," Szekely said in a statement. "At this point, we intend to vigorously defend Matthew Keys as we would any other hard-working member of the Newspaper Guild of New York who had been fired without cause."

Reuters hired Keys in 2012 and suspended him from his New York social media job March 14. Thomson Reuters spokesman David Girardin declined to elaborate Monday on why Keys was no longer employed.

Keys is scheduled to be arraigned Tuesday in federal court in Sacramento. He is charged with one count each of conspiracy to transmit information to damage a protected computer, as well as transmitting and attempting to transmit that information.

If convicted and sentenced to the maximum for each count, the Secaucus, N.J., resident faces a combined 25 years prison and a $500,000 fine, prosecutors say. However, experts say first-time offenders with no criminal history typically spend much less time in prison than the maximum term.

___

Follow Garance Burke at http://twitter.com/garanceburke.

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Reddit postings on bombing ‘suspects’ shameful

Last week we saw social media at its worst: arrogant, reckless and even racist.

Dozens of users on the social news forum Reddit resolved to launch their own public investigation into the Boston Marathon bombings by analyzing reams of publicly available photos of the attack sites. It's called crowdsourcing, and it was a dismal failure.

The bizarre mess of finger-pointing was largely confined to a subreddit, or forum, titled Find Boston Bombers.

Created by a 23-year-old British man who never set foot on the marathon route, the forum soon spun out of control.

All the "suspects" were innocent bystanders.

They had their faces enlarged, circled in red and were given glib nicknames. There was "blue robe guy" and "green hat man" and "roof man." Users singled out people in photos for holding their backpacks too tightly or looking too serious. False suspects were pointed to because of their race. And some, for all we know, were among the more than 170 victims of the blasts.

It's as if the tragic whirlwind of events in the last week unfolded in two universes.

In one, cops acted methodically, sifting through evidence and hunting down suspected terrorists in some of the finest police work we've seen. In another, self-proclaimed cyber sleuths wasted their time and ours by accusing people with a scant amount of evidence.

The low point for Reddit's gumshoes came in the wee hours of Friday's manhunt, when a member claimed to have heard compelling chatter on a police scanner. But the information was wrong and cruel: that missing Brown University student Sunil Tripathi, 22 — who hasn't been seen since March — was a suspect in the bombings. Worse still: Some media outlets ran with this despicable smear.

Moderation on Reddit is infrequent.

Usually that's OK because the stakes aren't this high. But this past week the stakes couldn't have been higher, especially for Boston.

This chaotic digital search could have easily spawned vigilantes who were thirsty for justice.

And what if being falsely fingered as a suspect sent someone over the edge?

Imagine witnessing unspeakable violence, only to have your photos being circulated as the perpetrator.

Reddit was lucky it didn't incite further suffering. It's lucky Bostonians are smarter than that.

So let's quit while we're ahead. No more crowdsourced "investigations."

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A mission to manage

The founder of Future Chefs can focus on her nonprofit's mission of training city youth for jobs in the food industry because she has enlisted the help of one of the country's top nonprofit innovation centers to take care of the business end.

"If I had to take time away from fulfilling our mission to get up to speed on how to manage the business end of this, I would have failed," said Toni Elka, founder and executive director of Future Chefs.

Boston's Third Sector New England manages Future Chefs' budget, does its payroll, negotiates its leases, does its yearly audit and helps with hiring and diversity issues. The group even extends a tax-exempt umbrella for Future Chefs and other early stage nonprofits.

"Third Sector is a trusted partner with a great track record that provides stability and helps us grow," said Elka, who started the organization herself using Boston school kitchens, but now has six full-time employees and a new teaching kitchen in the South End. The organization has placed 85 students in restaurant jobs including 16 at Aramark at Fenway.

The "Third" in Third Sector stands for the nonprofit world, or the third pillar after government and business.

The nonprofit sector is certainly no slouch in the Bay State, where one of seven workers or some 455,900 employees is employed at a tax-exempt entity, according to a recent report by the Boston Foundation. Massachusetts nonprofits generate $234 billion in revenue annually.

And Third Sector, founded in 1959, has been at the forefront of promoting social justice and helping nonprofits working for change to grow and add workers to fulfill their missions.

"Traditionally, working in the nonprofit sector has not been seen as worthy as toiling in the corporate sector," said Jonathan Spack, Third Sector's executive director. "Nonprofits do pay less than corporations, but there's an opportunity to effect change. What we try to do here and advise our clients is to make it a respectable and desirable career path for young people with good benefits and pay that can support a family. So it's not just something people do for a year or two, but stay on as a career."

Third Sector's mantra is that well-managed organizations are key to attracting and maintaining talented people looking to make a difference in the world. It doesn't just preach good management, but practices it by doing the administrative work for 41 nonprofits, in addition to Future Chefs.

Third Sector also helps its nonprofit clients find new chief executives and create leadership paths for talented employees. And Spack says that 91 percent of the nonprofit executives that the organization has placed in the past five years are still in those positions today.

Another important part of the organization is its grant-making Inclusion Initiative that helps nonprofit clients hire a more diverse workforce that's reflective of the communities they serve.

After 22 years of giving grants to 102 organizations, Third Sector has changed gears and is now directing funds not to individual nonprofits, but to networks that include businesses and faith-based organizations.

"Networks seem to be a more effective way to make change faster," said Ayeesha Lane, program manager for Third Sector's Inclusion Initiative. "Diversity can sometimes just be about numbers. But just because you hire minorities, it doesn't mean they will stay. What we do with our nonprofit clients is to help them develop inclusion in the workplace. That means making people feel they can bring their whole selves to work, and that their perspectives and cultural insights are seen as valuable."

Third Sector doesn't just give money, Lane added. It provides ongoing support and advice even to nonprofits that received grants years ago.

Third Sector owns an eight-story building on South Street that it bought in 2003 and, in addition to its staff, its floors house dozens of other organizations that fit its mission for social change. Those nonprofits provide job training and tutoring, pursue economic development and justice in poor communities, or focus on disability rights and sustainability issues, such as urban gardening and green practices in restaurants.

The basement of the building has a large, shared office area, where smaller nonprofits pay a reduced rent for incubator-like work space.

Third Sector supports itself from rent and by charging for its services, but not just any nonprofit qualifies. Third Sector takes a percentage of its clients' budgets to pay the employees that handle those nonprofits' business matters. Most clients are in Boston, but some are in other parts of the country.

Third Sector doesn't kick nonprofits out of the shared space as a for-profit incubator space might.

Some groups, such as the Chefs Collaborative, a nonprofit that supports sustainable practices in restaurants, have been there for five years. The SAMFund, a group that supports young adult survivors of cancer, is a longtime tenant, as is Tutors for All, which hires some 300-350 college students every year for paid federal work-study positions as tutors for Boston school students.

Organizations can choose to stay under Third Sector's 501(c)3 tax-exempt umbrella or strike out on their own.

But Future Chefs' Elka said Third Sector works for her because it is as passionate about managing nonprofits as her group is about helping students get excited about, and find work in the food industry.

"Boston is a place known for its tech innovation, but our nonprofits are also some of the most innovative in the country," Elka said. "What Third Sector does for nonprofit management is a perfect match for us and is a great model for the rest of the country."

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