Funeral Costs Are Soaring — Here's How States Can Help

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.