Death Care Industry, Economics Of

The Standard Industrial Classification used by the U.S. Department of Labor describes the death care industry as “establishments primarily engaged in preparing the dead for burial, conducting funerals, and cremating the dead.” There are approximately 22,000 funeral homes and 7,500 commercial cemeteries in the United States. However, the death care industry has a number of different components in addition to funeral homes and cemeteries, including monument makers, crematories, casket and urn manufacturers, producers of [Page 310]memorial merchandise, pre-need sales, and cremation disposal operations. Furthermore, there are peripheral vendors that include funeral software designers, web technicians, insurance and trust companies, and marketing agencies, all of which support firms involved with direct contact with the dead and the bereaved. Oftentimes there is a great deal of overlap with regard to these different components. This is especially true for funeral service corporations, which typically offer economies of scope by offering a wide range of services and products.

Regulation of this industry varies from state to state, with the exception of the Funeral Rule. Under this mandate by the Federal Trade Commission, firms must make explicit particular pieces of information, such as an itemized price list. The mandate also prohibits certain claims, such as that embalming is required.

Financial Crises

Throughout most of its 150-year history, the death care industry legitimated its role in society contributing to the general social welfare. In the early stages of the industry's development, the protection of public health and sanitation was offered as justification for services and goods. Once restoration techniques and chemicals had sufficiently developed to transform the dead into aesthetically pleasing memory pictures, the industry expanded its role to include the facilitation of grief therapy. Beginning in the 1990s a series of events led to a crisis of capital accumulation for the death care industry that resulted in a shift in the way the industry framed its functions for society.

There are a number of contributing factors to this economic change. Jessica Mitford, who had originally written a scathing and widely read critique of the death care industry in 1963, died. Her passing, in combination with a release of a new edition of her book The American Way of Death in 1998, inspired many in the mainstream media to investigate cost issues and report on exploitative practices.

Another factor that contributed to the financial crisis during this time was the declining death rates. North Americans continued to live longer lives, and members of the baby boom generation (i.e., those born between 1946 and 1964) were only beginning to bury their parents. Because the annual number of U.S. deaths (between 2.3 and 2.4 million per year from 1993 to the present) and the number of U.S. funeral homes remained relatively stable (a little over 20,000), there were insufficient increases in customers to offset simultaneously increasing fixed and variable costs.

Finally, as was made famous by the popular HBO TV series Six Feet Under, the death care industry underwent a phase of increased mergers and acquisitions. Service Corporation International (SCI), for one, became international as it expanded into the Canadian, Australian, and European markets. However, as this acquisitive period progressed, corporations incurred a great deal of debt.

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