January 30, 2020
By Trevor Bratton
In the wake of a loved
one’s passing, families are paying more for
funeral services than ever before. Fortunately, state lawmakers across the
country can ease these burdens.
The Bureau of Labor
Statistics (BLS) estimates
funeral costs have risen nearly 230% since 1986, compared to a 95% increase in
all commodities over the same timeframe. This increase coincides with a decrease in funeral homes
across the country, from 20,557 in 2009 to 19,136 in 2019. In the Goldwater
Institute’s home state of Arizona, families pay an average funeral
cost of $7,530, while having one of the lowest concentrations
of funeral service providers in the country.
Occupational licensing laws—which
require people to go through costly and time-consuming processes to get
government permission before they’re allowed to do their jobs—dramatically and
unnecessarily restrict the supply of funeral service providers. These laws often
have no public health or safety benefit, and in the case of funeral services,
they protect existing providers at the expense of would-be competitors, which
makes funerals more expensive for families.
Luckily, there’s
something that states can do: Follow Colorado’s example and de-license their
funeral industries. The result of this deregulation in Colorado—the only state
to deregulate the funeral industry—has had a profound effect for citizens. Cato Institute research found
that repealing Colorado’s funeral services licensure requirements resulted in a
15% decrease in funeral costs. But what about the quality of services—did this
suffer due to a lack of regulation? The researchers found no observable
decreases in service quality, as is often
the case.
Supporters of
occupational licensing say they believe it decreases the gap in knowledge
between buyer and seller, but they falsely assume it’s the only option to
achieve this goal. In fact, there is
a better alternative: voluntary private certification. This system would remove
the need for a government permission slip to work in the funeral industry, while
giving funeral service providers the option to seek a private certificate,
possibly giving them a competitive advantage. Consumers could choose whether to
purchase services from a certified oruncertified funeral service provider. This
is nothing new—indeed, this system already
exists in a variety of jobs, including auto mechanics, financial planners,
tour guides, home improvement contractors, and travel agents. We are able to
trust the services from folks in those industries thanks to online rating
systems like Yelp and Google Reviews, as well as laws against fraud and abuse that
are already on the books. Why should the funeral industry be any different?
There is simply no justification for maintaining the status quo (and the high
prices) when considering the net benefits a certification system would provide.
This year, Arizona took
an important first step in knocking down unnecessary funeral industry regulations
when it repealed a
requirement that funeral directors must be licensed as embalmers. But Arizona
policymakers shouldn’t stop there. Instead, they should replace the government
red tape with a voluntary private certification system for the funeral industry,
so grieving consumers can choose what’s best for them and their families during
a very difficult and private time, instead of government deciding for them.
Trevor
Bratton is a Policy Analyst Fellow at the Goldwater Institute.
