As funeral service corporations lag, aspiring entrepreneurs seek

Journal Record, The (Oklahoma City), Nov 17, 2000 by Edward Wong N.Y. Times News Service

WEST WINDSOR, N.J. -- Annette York's first body was heavier than she ever imagined. She and a co-worker had just taken it, zipped up in white plastic, from the refrigerator of a Trenton hospital morgue. It was cold and felt like a sack of rocks.

Having spent most of her life working as a hairdresser, York was used to handling curlers, not cadavers. What would she say if the family was there, she thought. What if he smelled?

But York, 42, a student in the funeral service program at Mercer County Community College, cracked a smile as she drove the body to the funeral home in a black station wagon. She liked working with her hands. She liked dealing with people.

And maybe, just maybe, one day she would run her own funeral home.

"I really enjoyed doing it," she recalled of that first corpse removal, in 1996.

"I don't know how to explain it. I just liked it. It gave me a feeling of satisfaction, much more so than I ever got from dealing with hair."

A few years ago, York's dream of owning a funeral home might have seemed quaint, even quixotic. Sure, business was supposed to rise as the baby boom generation aged. But the future of the industry seemed to belong to big corporations. Service Corp. International, Loewen Group and others were buying up family-run funeral homes and consolidating them into chains that could benefit from economies of scale in everything from buying caskets to paying for advertisements.

But even as the corporations captured one-fifth of the American market, earnings in the "death-care industry" failed to live up to expectations. Stock values plummeted. Service Corp.'s stock, which peaked at $47.13 in July 1998, now trades around $2.50, a fall of 94 percent. Loewen Group shares, which traded for as much as $43 before the company filed for bankruptcy protection in June 1999, now go for around 24 cents.

"Competition for acquisitions led to overpayment," said Jennifer Childe, an equities analyst with Bear Stearns. "That combined with negative publicity, an inability to raise prices and weakened death rates to lead to a deterioration of earnings."

All this has brightened the outlook for individually owned funeral homes.

These days, students from widely varying backgrounds are enrolling in mortuary schools, which in turn have revamped curriculums to focus more on business-management skills.

Although the number of students entering the country's 52 accredited mortuary schools each year has remained at about 2,500 since the mid-1970s, their demographics are changing, said George Connick, executive director of the American Board of Funeral Service Education.

Less than a fifth of them come from families in the funeral business, he said, in contrast to half of the students in the 1970s. Almost half of the enrolled students last year were women, as opposed to 5 percent in 1971. And the average age is 25.

"The business has opened up," Connick said. "It's brought people into the field who have stronger academic backgrounds and stronger backgrounds in working with people. I think the quality of service will improve over time."

This new breed of students is choosing the profession at a time when jobs are abundant.

Many people in the industry say that the 35,000 licensed directors now working will not be enough to meet the growing market.

The number of deaths in the United States topped 2 million a year in 1983 and rose to 2.3 million in 1998, according to federal statistics. By 2020, the government forecasts the number of deaths will exceed 3 million, and peak at 4 million a year by 2040.

The growing demand for directors is reflected in recent salary surveys done by the National Funeral Directors Association. In 1996, a funeral director/embalmer's average annual salary was $32,000 to $33,500.

Last year, the upper range increased to $37,000. Owner-managers of funeral homes made an average of $48,000 to $57,000 in 1996. Last year, that was reported to be $53,000 to $72,000.

Mercer County's program, founded in 1973, is a microcosm of what is happening in the industry. Only about half of the full-time students come from families in the funeral business, said Robert Smith, director of the program. About a third are women. And many of them want to run their own home.

York and two dozen other full-time students are enrolled in what, for most of them, is the third and final year of the funeral service program. They are not ashen-faced old men who could pass for the Grim Reaper's first cousin. Many of them have spouses and children and, looking to change careers, have spent two years completing 60 credits of preparatory coursework at Mercer before being admitted to the funeral program.

Qualifications for a funeral director's license vary from state to state. New Jersey has relatively tough requirements. An applicant must have an associate's degree in funeral service (meaning two years of college classes and a third year of funeral service classroom training), do a two-year internship and pass national and state board exams. Most students start their internship while in their second or third year of classes.