Funerals are getting more expensive in the U.S.

Information verified correct on April 29th, 2021

The history of funeral homes in America really begins with the Civil War. Prior to that, families in America would care for their own dead. Their bodies were prepared and displayed in the parlor of the house. It wasn’t until after the war that embalming became a regular practice. Families would request that their dead soldiers be shipped home, which required embalming in order to preserve the body.

But it was President Lincoln’s assassination that had the more profound influence. His embalmed body, which was put on display across the Northern states while it made its journey home, really gave the American public an up-close and personal view of embalming, not just their fallen president who symbolized so much even in death.

The body was put on display, there was an embalmer who traveled with the body, and it represented the future of disposition in American culture. Embalming became popular among everyday Americans and allowed funerals to be held much later than the usual 24 to 48 hours after death.

Along with the boom of the automobile industry, this made it possible for extended families to travel and attend a funeral service. At the turn of the 20th century, the death care industry revolutionized. Funeral homes began expanding beyond family-operated businesses. Family gravesites also began transitioning to burials in park-like cemeteries.

The industry was growing rapidly, and undertakers called for a need for professional, unified, and ethical practices. Thus, the National Funeral Directors Association was born. The number of funeral directors rose from 9,891 in 1890 to 24,469 in 1920.

Funeral

People who got involved in taking care of the dead started to organize and try to institutionalize their services. Associations and organizations that have all kinds of statements of ethical principles and efforts to be as transparent as possible got built into the funeral industry.

At the end of the 20th century, the death care industry became incredibly profitable, and multinational corporations began to buy into what was once a mom-and-pop operation across the board. This raised concerns about the intentions and morality behind for-profit businesses taking care of the dead. That didn’t mean that there were a great many people who thought making money off the dead was inappropriate and off-limits.

So the funeral business has, from the get-go, been a target of a number of attacks. Aside from critics, evidence shows that there’s still a lot of gratitude and appreciation for funeral homes. Excluding modernized changes, like using hearses instead of horses, traditional funeral rituals haven’t changed much in nearly a century.

The U.S. funeral service industry is a $16 billion business, and in 2019 there were 19,136 funeral homes in the U.S. Most funeral home directors are small business owners. According to IBISWorld, approximately 86.4% percent of funeral homes are owned by families or individuals. The other 13.6% are owned by three publicly traded companies: Service Corporation International, Carriage Services Inc. and StoneMor Partners, with SCI and making up the majority market share.

Funeral homes have a unique business model. They operate 24/7 because death is unpredictable. They’re also capital intensive. In order to own a funeral home, most inventory has to be purchased outright; furniture, vehicles, embalming equipment, preparation room, casket inventory, insurance. It’s estimated that opening a midsize funeral home takes about $450,000 in startup costs. For less upfront costs, there are several franchise opportunities in the U.S. It takes an average of $20,000 dollars to buy into one.

It’s worth noting that funeral homes are still a for-profit business. To increase their bottom line, some funeral directors use sales tactics. And in recent years, many of these businesses have been scrutinized for attempting to upset items to grieving families. Some dishonest funeral directors will even insist that families purchase items or services that are not required by the Federal Trade Commission, also known as the FTC.

Although it varies from state to state, things like wooden caskets, vaults, embalming, and burial in a funeral plot are not required by federal law. Consumer advocates have found that some funeral directors prey on the bereaved to get them to spend more money. The family members and friends of the person who died are in a very vulnerable state.

Some funeral directors take advantage of that and will imply the use of different statements such as, “you want the best for your loved one, don’t you?” Or something like, “well, to properly honor your loved one, doesn’t this make sense?” And things like that. And at that point, they’re likely to spend more money and not focus on a budget because casket B is way better than casket A, and they’re not focusing on price anymore. And that can lead to problems.

It is a very emotional time. It is a time that can be riddled with guilt and shame. And oftentimes, we advise individuals who are navigating any type of loss, whether it be physical death, weight loss, or symbolic losses, to not make any major decisions in the first 90 to 120 days if they can prevent it. And unfortunately, death kind of disrupts that advice. And part of the reason that we provide that suggestion is because we are making emotional-based decisions that may not be logical, that may not be actually good for us in the long term.

The funeral rule created by the FTC requires funeral homes to provide a written itemized price list for their products and services when asked. But many still aren’t transparent about their pricing. In 2018, the Funeral Consumers Alliance and the Consumer Federation of America survey 211 funeral homes and found that only 16% posted their complete priceless online, and only 27% posted any rates at all.

Consumer advocates are urging the FTC to revise the final rule to require prices be listed online. Another study by the FCA and CFA found that most people aren’t aware of their funeral rights. 25% of all consumers surveyed knew about the pricing rule.

Over the years, there have been several investigations uncovering dishonest and unlawful mortuary practices. Some of the claims include funeral homes selling body parts, unrefrigerated bodies left to decompose, and mixing up the identity of the deceased.

The Covid-19 death toll has risen to over 500,000 Americans. Leaving hospital mortuaries, funeral homes, crematories, and morgues overwhelmed with bodies. The federal government provided aid to several hot spots during the height of the pandemic. In New York City, for example, funerals and morgues received refrigerated trucks to store the overflow of the bodies. But with stress came lawsuits. In April 2020, a Brooklyn funeral director lost his license following an investigation for failing to respectfully and lawfully handle remains.

According to the article, neighbors complained of a stench coming from a U-Haul truck and a trailer truck. The owner said he had used the trucks for overflow storage, but only after he had filled the chapel with more than 100 corpses. A lawyer representing the funeral director claimed that many others were doing the same thing, but his client was used as a scapegoat. It’s a common misconception that funeral homes have increased their bottom line during the pandemic due to the enormous increase in bodies.

But the industry as a whole actually lost money. Pandemic restrictions require families to hold smaller services or none at all. For a few professionals, the cost of doing business has increased during Covid. There’s much more personal protective equipment that’s needed. They had to have increased staffing because they needed to rotate shifts and keep people safe and work in separate groups. They haven’t been able to use things like limousines and cars that have been sitting in garages for a year and a half we’re still paying for.

The economic downturn also contributed to an increase in families opting for cremation, which costs less than a typical funeral. The NFDA projects that roughly 56% of those who died in 2020 were cremated. By 2040, they predict that the U.S. cremation rate will rise to more than 78%. In 2019, the average cost of viewing and cremation was $5,150. The cost of a traditional funeral and burial was $ 7,640.

As history repeats itself, many families are opting to have home ceremonies for their loved ones. Even prior to Covid, consumer preferences were beginning to change. Induced by cost considerations, environmental concerns, and more people becoming less religious. Silicon Valley sees a surge in startups specializing in end-of-life care. Major investors are backing them up. According to data from Crunchbase, over the past three years, venture and seed backers have put capital into at least 26 companies offering products and services around death and bereavement.

From water-based cremations to online memorials, families are opting for alternatives to traditional funerals and burials. Cremation ash startups are some of the most popular choices among consumers. Take, for example, Eterneva. It’s a company that helps families memorialize their deceased loved ones by making diamonds from the carbon in their ashes or hair.

More established companies are disrupting the funeral industry as well. Amazon and Costco have entered the business, selling competitive priced caskets online. So with the less religious landscape, cremation on the rise, and embalming on a decline, what does this mean for the traditional funeral home business? Experts say it’s going to be around for a while. It’s hard to know where the funeral industry will go into the future. But we would venture to say that the funeral industry is here to stay.




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