Latest / The Demographics Podcast with Fexingo: Aging Populations, Birth Rates, and Economic Impact / How Falling Birth Rates Reshape the Funeral Industry
Transcript
- Lucas: So, we've spent a lot of episodes talking about how falling birth rates ripple through industries that serve kids — toys, diapers, education. But there's another side to this demographic shift that's less obvious. Luna: Let me guess — the funeral industry? Lucas: Exactly. Fewer births today means fewer adult children in the future to handle end of life arrangements. And that's already changing how the death-care business operates. Luna: It's one of those things you don't think about until it becomes personal. I remember when my grandmother passed, my mom and her siblings handled everything. But what if there are no siblings? Lucas: Right. And what if the deceased themselves were an only child, with no kids? That scenario is becoming more common. The U.S. cremation rate has gone from about 25 percent in the year 2000 to over 60 percent today. And a big driver is the lack of family to organize a traditional burial. Luna: So it's not just about preference — it's about practicality? Lucas: Partly. Cremation is simpler, cheaper, and doesn't require someone to maintain a grave site for generations. But there's also a cultural shift toward individualism and environmental consciousness. Green burials — no embalming, biodegradable caskets — are growing at about 10 percent annually. Luna: I've heard of companies like the Neptune Society. They specialize in cremation, right? Lucas: Yeah, Neptune Society is one of the largest providers of direct cremation in the U.S. They've doubled their market share in the last decade. Their model is low-cost, no-frills — you pay a flat fee, they handle the paperwork, and the family gets the ashes. No need for a funeral home visit. Luna: That sounds like a response to a very specific demographic reality: people who die without a large network of survivors to coordinate a service. Lucas: Exactly. And it's not just about the service itself. Funeral homes are seeing a shift in pre-need planning. More people are prepaying for their own arrangements, partly because they don't want to burden the few family members they have. Luna: So the business model is moving from 'we serve the grieving family' to 'we serve the individual planning ahead'. Lucas: That's a great way to put it. And that changes everything — marketing, pricing, even the physical layout of funeral homes. They're adding more private consultation rooms and fewer viewing chapels. Luna: Speaking of changing layouts, what about in rural areas? I remember reading about 'death deserts' — places where there just aren't enough deaths to support a funeral home. Lucas: Yeah, that's a real issue. As young people move to cities and birth rates fall, rural counties are aging out. The death rate stays steady, but the total population declines. A funeral home needs a certain volume to stay profitable. Some counties now have zero funeral homes within a 50-mile radius. Luna: So families have to transport the deceased long distances, or pay for a cremation service from a city provider who ships the ashes back. That adds cost and complexity. Lucas: And it's a growing problem. The National Funeral Directors Association estimates that about 20 percent of funeral homes have closed in the last 20 years. Most of those were in rural areas. Luna: That has to create opportunities for consolidation. Big cremation chains like Service Corporation International or Carriage Services buying up independent homes. Lucas: You're right. Those two companies now own over 2,000 funeral homes and 500 cemeteries in North America. They're building economies of scale — centralized call centers, shared logistics, bulk purchasing of caskets and urns. Luna: But the flip side is that the personal touch might get lost. A family-owned funeral director knows the community. A corporate chain might not. Lucas: That's a real tension. And interestingly, some independent homes are pivoting to offer more personalized, non-traditional services — celebration of life events, themed ceremonies, even livestreaming for distant relatives. They're betting that customization will be their competitive edge. Luna: Because the traditional model — a viewing, a church service, a burial — assumes a large local network. That's rarer now. Lucas: Exactly. And there's another demographic angle: the rise of the 'childless elderly.' The number of Americans over 65 without a living child is expected to double by 2035. That's a huge group of people who will need someone — not family — to handle their final arrangements. Luna: So there's a growing demand for what are sometimes called 'death doulas' — professionals who guide people through end of life planning and even coordinate the funeral. Lucas: Yeah, that's a niche that's emerging. It's still small, but the National end of life Doula Alliance has seen membership grow by 40 percent in just two years. It's a response to the same underlying trend. Luna: It's interesting how these demographic shifts create entirely new job categories. Lucas: And new business models. Consider the economics of a traditional funeral: the average cost is around $8,000, including casket and burial. But a direct cremation is more like $2,000. So the revenue per death is falling, and funeral homes need higher volume to stay afloat. Luna: But if birth rates are falling, the number of deaths per year in the U.S. is actually projected to rise through the 2030s as the baby boomer generation ages. So volume might increase even if per-unit revenue drops. Lucas: That's a key point. The total number of deaths is rising — about 3.3 million in 2023, up from 2.4 million in 2000. So the pie is getting bigger, but the slices are smaller for traditional funeral homes. Cremation takes a bigger share each year. Luna: And eventually, when the boomers are gone, the death rate will decline, right? Because there will be fewer people overall. Lucas: That's the long-term outlook. By around 2045, the number of deaths is expected to peak and then start falling. So the funeral industry will have to adapt to a shrinking market eventually. That's when the real shakeout happens. Luna: So the next 20 years might be a golden age for cremation providers, but then they'll face the same demographic headwinds as everyone else. Lucas: Exactly. And that's why we're seeing some companies diversify — offering pet cremation, for example, since pet ownership is rising even as human birth rates fall. Or expanding into death-care technology, like online memorial platforms. Luna: It's a grim business to talk about, but it's fascinating how it mirrors the broader demographic story. Lucas: It does. And you know, if walking through the economy with us has made something click for you, it's worth mentioning that listener support is genuinely what keeps this show ad-free. A couple of dollars a month makes a real difference — buy me a coffee dot com slash fexingo. Luna: It's true. That kind of support allows us to spend time digging into these niche topics, connecting the dots that most business coverage misses. Lucas: So to bring it back to the funeral industry — I think one of the biggest takeaways is that the 'death-care' business is being reinvented in real time. The companies that thrive will be the ones that recognize that the customer isn't a large family, but often an individual or a small group. Luna: And the ones that don't adapt? They'll be the ones left with empty chapels and declining revenue. Lucas: Right. So if you're looking for a concrete example of how demographics reshape an entire industry, this is it. From cremation rates to death doulas to corporate consolidation — it's all connected to the simple fact that we're having fewer kids. Luna: And that trend doesn't stop. It just keeps rippling through every sector, one at a time. Lucas: Yeah. Next episode, we'll look at another industry that's quietly being transformed. Until then.