Officials
of the Pennsylvania Department of Labor and Industry said today that they have
not extended the Prevailing Wage Act to projects funded with state economic development
loans, including PIDA loans.
The word came in a meeting held this afternoon at the Labor and Industry Building
attended by David Carver and Tim Anstine representing the Pennsylvania Economic
Development Association, Hank Butler of Pennsylvania Associated Builders and Contractors,
Inc., Tom Armstrong of the Pennsylvania Manufacturers Association, Fred Sembach
and James Welty of the Pennsylvania Chamber of Business and Industry, and various
officials from the Department of Labor and Industry, including Deputy Secretary
John Ferko.
The meeting was prompted by the announcement last month by the Department of Community
and Economic Development (DCED) that all of the Commonwealth’s economic development
programs which fund construction projects would be subject to the Prevailing Wage
Act. DCED was reacting to the recent Pennsylvania Supreme Court ruling that held
that the Pennsylvania National Mutual Insurance Company office building project
in Harrisburg, which was funded in part with tax increment financing, was subject
to the Prevailing Wage Act. DCED’s decision to extend the effect of this ruling
to nearly all economic development programs has created a firestorm of controversy
in the economic development community, which sees the imposition of prevailing
wage requirements in essentially private development projects as having a devastating
effect on their ability to compete with other states for projects.
L&I officials, who are charged by statute with enforcing the Prevailing Wage Act,
expressed surprise at the broad effect given by DCED to the Supreme Court’s ruling.
Labor and Industry’s current policy is that loan programs (such as PIDA) and tax
abatement programs are not subject to the Prevailing Wage Act. Deputy Secretary
John Ferko promised to make L&I’s position known to DCED officials, so stay tuned.
In a related development, Attorney General Mike Fisher, speaking at the Workforce
Investment Board of South-central Pennsylvania on October 7, in response to a
question posed by Michael Ross of the Franklin County Area Development Corporation,
stated that the Supreme Court’s ruling should only be applicable to projects involving
tax increment financing. He was also unaware of DCED’s broad interpretation.
