Latest / The Demographics Podcast with Fexingo: Aging Populations, Birth Rates, and Economic Impact / How Falling Birth Rates Reshape the Funeral Industry
Transcript
- Lucas: So, a funeral home in my town, founded in 1928, just closed last month. The owner told the local paper there weren't enough families in the area to keep the lights on. And I thought — we've talked about birth rates hitting the diaper industry, the toy industry, even the mortgage industry. But death? That's supposed to be the one thing that doesn't change. Luna: Right — everyone dies eventually. So the funeral industry should be stable. But you're saying it's not. Lucas: It's not. Because the number of deaths is actually pretty predictable in the near term — about 2.8 million a year in the U.S., give or take. But who's left to handle those deaths, and what they want done with the body, that's shifting dramatically. And lower birth rates are a huge part of it. Luna: Walk me through the connection. Fewer births means an older population overall, but deaths are still deaths. Lucas: Sure. One immediate effect: fewer children to manage the funeral. If you're born in 1930, average family size was over four kids. Boomers averaged two to three. Millennials? About 1.7. So when a person passes, there are fewer adult children to organize, to pay, to even have a service. That's driving what the industry calls 'direct cremation' — no viewing, no ceremony, just cremation and done. Luna: And direct cremation is much cheaper. I've seen ads for $695 in some markets. That's a fraction of a traditional funeral, which runs around $8,000. Lucas: Exactly. The cremation rate in the U.S. was about 40 percent in 2010. By 2025, it was over 60 percent. The National Funeral Directors Association projects it'll hit 80 percent by 2040. And it's not just cost — it's also that fewer family members means fewer people to coordinate a traditional service. You don't need a wake if the only relative is an estranged nephew. Luna: That sounds bleak, but it's the reality for a lot of older adults now. No spouse, no kids nearby. So what happens to the funeral home business? Lucas: Consolidation. The two biggest players — Service Corporation International, or SCI, and Carriage Services — have been buying up independent funeral homes for decades. SCI alone owns about 1,800 funeral homes and 500 cemeteries. Their model works because they centralize things like cremation logistics, fleet management, even sales. A small-town funeral home can't compete on price with a corporate-owned one that does 500 cremations a year. Luna: But does that mean the independent funeral home is going extinct? Like the local bookstore? Lucas: Not quite extinct, but definitely endangered. In 1980, there were about 22,000 funeral homes in the U.S., mostly family-owned. Today it's about 19,000, and the number keeps dropping. But the ones that survive are finding niches. Some focus on ethnic communities — Greek Orthodox funerals, Jewish funerals, where tradition matters. Others go hyper-local, offering personalized services that the big chains can't replicate well. Luna: So the survivors are the ones that become more like event planners than body handlers? That's a shift. Lucas: That's exactly the word for it — event planner. A funeral director I spoke to in Portland said half his job now is helping families write obituaries, create photo slideshows, and arrange catering. The actual embalming and casket selection is a smaller part. And because there are fewer family members, he often deals with a single adult child who's overwhelmed and wants everything done quickly. Luna: Which brings us to pre-need planning — buying your funeral in advance. Has that grown? Lucas: Hugely. About 40 percent of funerals today are pre-arranged in some way, up from maybe 20 percent two decades ago. And it makes sense: if you don't have kids who will handle it, or you don't want to burden the ones you do have, you lock in today's prices and specify exactly what you want. SCI and Carriage Services both push pre-need heavily — it's basically a form of consumer finance, earning interest on the money before the service is provided. Luna: And with inflation, that's a pretty good business model. You get the money now, invest it, and deliver the service later, when costs have risen. Lucas: Right. But there's a demographic twist. Pre-need customers tend to be older, more affluent, and more likely to have children who live far away. The very group that's growing. So the industry is actually benefiting from the aging population in that respect. The challenge is on the volume side: if birth rates stay low, eventually the number of deaths will plateau or even decline, since there are fewer people in the pipeline. Luna: We're not there yet — the boomer generation is still passing. But once that wave crests, say in the 2040s, then the funeral industry faces a real contraction. Lucas: Exactly. And the industry is already preparing. Some funeral homes are diversifying into pet cremation, because pet ownership is rising while human births fall. Others are offering 'green burials' — no embalming, biodegradable casket, natural cemetery — which appeals to environmentally conscious consumers who also happen to be less religious and less traditional. Luna: Green burials are still a small niche — maybe 5 percent of the market — but they're growing fast. And they cost less than a traditional funeral, but the land costs can be high. Lucas: And there's a whole other layer: digital memorialization. With fewer descendants to visit graves, online memorial pages become the primary site of remembrance. Companies like Legacy.com or even Facebook's memorialized accounts are taking over the role of the headstone. You can't visit a plot in Kansas if you live in Tokyo, but you can log into a page. Luna: That raises a really interesting question about the economics of cemeteries. If graves are unvisited, who pays for upkeep? Cemeteries rely on endowment funds, but those are often underfunded, and if no one comes, they might just let them go. Lucas: There are already cities with 'abandoned cemeteries' — not from the 1800s, but from the 1970s. Families have moved away, no one left to donate. The cemetery association goes bankrupt, and the local government takes over, which is a cost no one budgeted for. That's a direct consequence of lower birth rates and geographic mobility combined. Luna: So the funeral industry is basically being reshaped by two demographic forces: fewer children to handle arrangements, and an aging population that plans ahead. That's a weird mix of contraction and opportunity. Lucas: It really is. And this is one of those episodes where I think the economics are actually pretty personal. Like, if walking through the economy with us has made something click for you, it's worth knowing that a handful of listeners chip in monthly through buy me a coffee dot com slash fexingo, and that's literally what funds making this many of these shows. No ads, no sponsors — just people who find the demographic lens useful. Luna: Yeah, and it keeps us independent. We can talk about funeral homes or birth rates or whatever without worrying about upsetting a corporate partner. Lucas: Exactly. So back to the funeral homes — one more trend I want to mention: the rise of the 'death doula.' That's a non-medical professional who helps people plan their end of life experience. It's not a funeral director, not a therapist. But as families become smaller and more dispersed, death doulas are filling a gap that used to be filled by relatives. Luna: Interesting. And that's a new job that basically exists because of demographic change. There are training programs now. The National end of life Doula Alliance has like 1,500 members. Lucas: Right. So to sum up: falling birth rates are reshaping death in ways we don't often think about. Fewer mourners, more direct cremation, more pre-need planning, consolidation of funeral homes, digital memorials, and new roles like death doulas. The funeral industry is not dying — but it's evolving fast. Luna: And the next time I see a direct cremation ad for $795, I'll think about all the demographic forces behind that price tag. Lucas: Exactly. Thanks for listening to The Demographics Podcast with Fexingo — we'll be back next week with another angle on how population change rewrites the economy.