Overregulation Takes the “Fun” Out of “Funeral Home Management”

The passing of a loved one is an intensely difficult and emotional time for the family, and the last thing they want to think about is costly and complex arrangements for the burial. It is therefore somewhat dismaying to learn what kinds of pressure the operators of funeral homes are subject to under current industry regulations, many of which have the effect of increasing costs that are then passed on to consumers.

An illustration of this problem can be found in the case of Verlin Stoll, who operates a budget-minded funeral home in St. Paul, Minnesota. Stoll offers low cost, no-frills services for people who cannot afford the more elaborate options offered by his competitors. In fact, his base rate of $250 is a mere fraction of the typical going rate for funeral services in the area.

However, Mr. Stoll may not be able to keep his prices so low for long, since state regulations require that every individual funeral parlor contain its own embalming center, an addition which carries a cost of roughly $30,000. A funeral home such as that run by Mr. Stoll has no need for its own embalming center, as that service is easily outsourced to a central location due to the high frequency of cremations in Minnesota. In essence, the state is demanding that he spend a small fortune on a room that will see no use.

Pointless, anti-consumer regulations such as these are unfortunately common, as industry lobbying associations attempt to erect legal barriers to competition by new firms. Last year, the state of Pennsylvania began efforts to deregulate the funeral home industry, removing several archaic and nonsensical requirements from their legal code. That industry incumbents were the most vocal in their opposition to these reforms should come as no surprise.

Among other things, the Pennsylvania legislature moved to repeal prohibitions for serving food on the premises, for licensed funeral directors to operate more than two homes, and a requirement that homes be named after the proprietor. The legislature also moved to repeal a requirement that owners of funeral homes must obtain a license as a funeral director. While small businessmen and emerging entrepreneurs welcome the looser restrictions, trade associations and established funeral directors criticized the move, ostensibly over quality concerns, but Pennsylvania and Maryland are currently the only two states that have licensing requirements for funeral homes, and only six states prohibit food service. The fact that funeral services are conducted every day in these other states at no obvious detriment to the public health or welfare does not seem to have deterred such complaints.

A major effect of these changes in regulation would be to open the profession to more people, thereby promoting competition and lower prices for consumers. The financial incentives for incumbents to oppose regulatory reform are therefore large, with the dispersed benefits to consumers being generally too small to warrant significant action. With any luck, however, cases such as that of Mr. Stoll in Minnesota, who is now suing the state over his right to avoid onerous and unnecessary expenses, will set a precedent for other industries and begin to break the yoke of regulatory oppression, providing a market that is fairer and freer for all.