Just the other morning I read two articles from Yahoo Finance which showed a couple of trends happening in American society.  The first trend can be read about in this article titled “There are more Americans out of work than their are jobs open for the first time since 2021″.

And the second article, that you can read about here, was titled “Retail spending is starting to look more and more like the labor market“.  Among other interesting facts the article makes this comment, “Consumers in the top 10% of the income distribution accounted for 49.2% of total spending in the second quarter, registering the highest level recorded since 1989.”

Reading those articles made me think about Death Care and how these economic indicators might come to play in the Death Care world.  While the ramifications of these indicators is wide, I have some thoughts that may or may not be correct assumptions.  I think the big take-away is simply to be aware of what is happening in our economic sphere and be prepared to respond with business decisions as you need to.

Labor —  Here is a quote from the first article concerning employment, “Unemployed workers are staying out of work for longer, even as layoffs remain low.  This suggests the shift is less about an increase in people losing jobs and more about a decline in job openings.  In other words, the challenge right now lies less in job security for those already employed and more in the difficulty of reentering the labor market once you’re out of it.”

In the funeral director and/or mortician sphere finding quality help continues to remain one of the top concerns of funeral home owners and managers in almost every survey that comes out.  And, the latest latest job placement statistics I have is that in 2024 there were 2,106 graduates of mortuary science schools across the U.S. and 84% of them found employment.

I’m wondering if emloyment is “tightening up” among funeral homes and if it is that may bode well for companies in keeping their personnel costs from increasing at a higher than inflationary rate.

I’m also wondering if a decline in job openings in other occupations might spur more people to look to funeral service.  Many people who don’t understand all the nuances of funeral service look to the profession as one with a “secure” future.  Latest statistics also tell me that there were 3,363 new enrollees in funeral service programs so, I believe that, the pipeline looks good for future employees.

It very well could be that a tight job market in other occupations brings a better outlook for funeral home owners and managers as more and more people may look to enter the Death Care field.  With demograpahic indicators suggesting that the number of deaths in America will rise over the next 10-20 years, this would be welcome news to the profession.

Disparity of Consumer Spending — There is a lot to document that the wealthiest in our society are spending more and the lower end of the economic population is spending less as inflation keeps a hold on an elevated number.  Many economists suggest the United States economy is on a “K-shaped” recovery method as those who have extra assets that are invested are gaining at a greater than average rate and those with less or no invested assets are seeing buying-power erode  —  hence, the statement from above where “Consumers in the top 10% of the income distribution accounted for 49.2% of total spending. . .”

One of the easiest areas to see this is in the hotel sales sphere —-  Here’s what one economist suggested, “That lower-income households are seeing weaker income growth is one explanation for why demand is weakening for the most affordable lodging options.”  So as low-cost hotel chains such as Choice and Wyndham are having difficult times the more luxurious chains such as Hyatt, Hilton, and Marriott seem to be doing just fine.

Tom Anderson
Funeral Director Daily

So, what does that disparity of consumer spending mean for funeral homes?  You might argue that those with lower means will feel financially unsecure at the time of death and opt for lower priced services such as direct cremation.  I don’t necessarily think that is true because there are so many variables in the choice of Death Care disposition and so many personal opinions and choices.  While in-hand assets will make a difference to many at the time of death not everybody will lower their choice standards because of a temporary lack of available funds.

I’m not so sure that funeral homes can survive a “K-shaped” economic recovery “if” only about 10% of the populous does almost 50% of the death-care spending.  In an economy where the other 90% of the population spends the other 50% I’m not so sure that those Death Care services would bring much in the way of margins.  That’s why it is imperative that funeral homes can give options to families who may be temporarily low on funds because of an economy that is costing them more than normal for simple-living necessities.

Will this situation lead to more crowd-funding such is available with the funeral service profession’s expert at such Treasured Memories Community Funding?  I don’t know, but it would probably be wise for all funeral homes to know how to access that option for those client families that may need the help.

Funeral homes are a different business. . . one in which one person equals one death call — and where each death call equals only one purchase.  Other areas of the economy could have one person buying six televisions or one person buying three cars.

In a world where cars or televisions are sold all that really matters is that enough are sold to be profitable. . . . .In the funeral home business the number of deaths (and sales) are finite at one per person and in a country where there is greater wealth inequality than prior years, forcing lower-priced choices by the masses, would probably not be as lucrative as it once was for those businesses.  In that sphere it becomes necessary that all families are able to access the funds necessary for the services that they prefer  —  if they can’t do that, that doesn’t bode well for those businesses who depend on the margins provided by those services.

My dad used to say that “Blue-Collar” families are the backbone of funeral service.  As the middle-class of America seems to be shrinking in lieu of wealth on one hand and financial struggle on the other hand, who will become the backbone of funeral service?  That’s maybe a great question.

More news from the world of Death Care:

Enter your e-mail below to join the 3,201 others who receive Funeral Director Daily articles daily

“A servant’s attitude guided by Christ leads to a significant life”

Funny how 28 hours alone in a car gives you plenty of time to think about things you probably would not think about otherwise. . . . I arrived home in Minnesota on Monday after spending Saturday, Sunday, and part of Monday returning from our winter rental home in Southwest Florida.

You might find this odd, but I actually enjoy the three days — I drop Angie off at the Fort Myers airport on Friday and she flies home. . . I then leave our rental unit bright and early on Saturday morning to drive our car back to Minnesota.  We’ve done this for five years now. . . and it works for us.

Luckily my car, actually an SUV has Sirius XM radio and I have the opportunity to listen to about 150 different stations over the 28-hour drive period.  This year I got tons of information on the NCAA basketball tournament, learned alot about NFL free agency and the upcoming draft, and enjoyed listening to experts on business and government/political related stations as well.

That leads me into a discussion of the title of today’s column.  The government/political stations talked a lot about potential tariffs.  It was interesting to hear some philosophical arguments about what happens to business if/when tariffs are implemented.  I would argue that the consensus of “experts” proclaimed that tariffs would hurt large companies that trade internationally and also small companies because increasing inflation may be a collateral side effect of tariffs and small companies are, according to the experts, hurt more by inflation.

What I came to understand is that the companies in the United States termed “Mid-Cap” companies would probably benefit the most or be hurt the least.  Reasoning being is that while large companies have an international headwind and small companies battle inflation, many investors will turn their attention to inside the United States and support these companies. . . . . Much of that support, it was purported, would come from Private Equity that would look to invest inside the United States rather than look internationally.

Here’s a couple of recent articles that I found about that theoretical situation:

What might this mean for Death Care? —  When I heard this concept, as I usually do I tried to understand how it will affect us in Death Care.  One thought that I have is that I know many “acquisition companies” use private equity to help them in the financial aspects of their acquisitions.

If private equity turns “inward” it may mean that there will be more resources available for the acquisition of funeral homes and/or cemeteries.  And, if there is more cash available, that may mean that for “desireable” funeral homes and cemeteries there could be a competition to purchase them which might, theoreticaly, raise the sale price.

I don’t know. . . just one thought.

Do funeral homes still have a “Wide Moat”?  —  Kind of going hand-in-hand with the thought of paying a high price to acquire a funeral home acquisition companies need to be sure that the acquired funeral home has a “Wide-Moat”.  In a business context here is how that term is defined:

“. . . . a “moat” refers to a sustainable competitive advantage that protects a company’s profits and market share from competitors and external threats.” 

Tom Anderson
Funeral Director Daily

Traditional funeral homes have historically had this “wide-moat” in their communities.  What widens that moat is that the existing business usually has a strong history, a building that would be expensive to duplicate, professional staff known in the community, and a book of pre-arrangments in its file for future business.

In addition, ownership and staffing professionals, in most states, need a license to be able to conduct much of the work that funeral homes take part in.  The time and expenses to obtain that license turns out to be a moat for others wanting to come into the business as well.

A new business to compete with that business would have to make an investment in a facility, find “licensed” staff more than likely who will not be well known in the community, and have no existing pre-arrangements to build off.   As you can probably understand, penetrating the “moat” of the established business may take years and result in financial losses before any gains.

My question here, is “With the changing face of funeral service, is the moat getting narrower“?  For instance, can cremation providers operate out of a leased strip-mall?  Can social media and online arrangements take the place of well-known staff?  Can renting event centers for celebrations or services compete with a well-appointed traditional funeral home? Is licensed staff necessary for all aspects of Death Care anymore?

I don’t have the answers to those questions, but I believe they are being asked by many in today’s Death Care world.  I would guess that there is no doubt that the “wider moat” that you have, the more your funeral home will be worth.

It is interesting to note that the S&P 500 has had an incredible run over the past 10 years gaining 235% in that time — an average of 23.5% increase per year.  However, an Exchange Traded Fund (ETF) that invests only in what it considers “Wide-Moat” companies has done even better in that time period gaining 240%.  That wide-moat fund trades under the stock symbol “MOAT”.

Successful funeral home/cemetery acquisition companies have known about the “Wide-moat” theory for a long time.  However, I’m wondering if those companies still see the local family funeral home as being “Wide-moat”. . . . . .

More news from the world of Death Care:

Enter your e-mail below to join the 3,120 others who receive Funeral Director Daily articles daily:

“A servant’s attitude guided by Christ leads to a significant life”