Amazon Raises and How Changes to Pay Structure Impacts Qualifying for a Mortgage

Amazon recently announced that it’s increasing it’s minimum wage to $15 for all employees, including part-time, seasonal employees and temps effective November 1, 2018. Amazon states this will benefit more than 250,000 employees and over 100,000 people who will be hired for the upcoming holiday season. Even Operations and Customer Service employees who are already making $15 per hour will receive an increase to their hourly wage.

Amazon is phasing out the restricted stock unit (RSU) grant program and adding an employee stock purchase plan. From Amazon’s blog: 

“Yes, we’ve heard from our hourly fulfillment and customer service employees that they prefer the predictability and immediacy of cash to RSUs. We will be phasing out the RSU grant program for stock which would vest in 2020 and 2021 for this group of employees, replacing it with a direct stock purchase plan before the end of 2019. The net effect of this change and the new higher cash compensation is significantly more total compensation for employees, without any vesting requirements, and with more predictability.”

I would imagine that employees working at the in the Operations and Customer Service departments will have higher odds of being able to participate in the employee stock purchase plan instead of having to wait until they are vesting in the RSU stocks.

Amazon has fulfillment centers throughout Washington state. One is located close to our corporate headquarters in Kent, Washington. When I look online – it looks like positions start at around $13.00 per hour. If there are minimum wage jobs (outside of Seattle) at their fulfillment centers, the minimum wage in Washington state (at the time of publishing this post) is $11.50 per hour. The City of Seattle currently has a $15.00 minimum wage.

As far as a mortgage is concerned, when someone is paid hourly, typically lenders take the hourly income x average weekly hours worked x 52 weeks and then divided by 12 months. Lenders ideally want to see a two year history with the employer with the amount of hours worked being steady or trending higher.

Overtime, bonus or seasonal income generally will require two years of documented history of receiving this type of income. This income is typically averaged over the last two years.

With RSU’s (restricted stock units), lenders can consider the vested RSU’s as income under certain conditions. The employee must have received the RSU’s for at least two years, been distributed to the employee without restrictions and have documentation that the RSU’s will likely continue for at least three

Again, I think it’s a greater benefit for employees in the centers to receive an hourly increase they can enjoy now instead of have their RSU’s vested. It’s a much more practical option just in time for the holidays!

If you’re considering buying or refinancing a home located anywhere in Washington state, I’m happy to help you with your mortgage needs.

 

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