Last week I came across this article from The Hill entitled, “Two million people fled America’s big cities from 2020 to 2022”.  If you have read my articles for anytime now you will understand that when I look at an article like that usually the first thing that comes to mind for me is “How will that affect the death care business”?

 

That was again my take and in this article I will ponder what this new migration may mean in the months, and most likely, years to come.

 

I also found the results of a survey entitled, “The New Geography of Remote Work”.  Both articles point out that the migration out of our major urban centers actually began before the pandemic. . . and then were exacerbated by the pandemic.  Interestingly enough, the article from The Hill suggests that we have just seen the beginning.  The numbers they state are that 4 million Americans have already moved out of urban centers, but 19 million more are expecting to do so in the next few years.

 

And, it just isn’t just to the suburbs — “The New Geography of Remote Work” states that a full 41% of those moving out of urban centers will be moving between 2 and 4 hours from the urban center.

 

Funeral Director Daily take:  These were really great, and eye-opening articles, especially on the challenges we will soon see in big urban centers.  One of the articles points out that in 10 of the largest U.S. cities, half of all offices sit empty.  My assumptions are that those office buildings values will go down, lowering the taxes assessed on them which will create the need to lower urban city and school budgets. . . . or, raise taxes on other buildings that are in use — like urban funeral homes.

 

As we continue to move into a death care world that is less about full-service traditional services and more about cremation and direct cremation services we are also, in my opinion, in a death care world of “stable or declining” revenue per service.  At least it is fair to say that revenue per case is not growing by leaps and bounds, even if not declining rapidly.

 

Urban funeral homes, many which do great numbers of services, probably can stand to lose some cases and still have great numbers.  However, if they are in the “stable or declining” revenues per case, and their customer base is shrinking because of net migration away from urban centers, it will cause some challenges.  Especially if they find themselves in price wars for low-cost services coupled with higher operating expenses.

 

So, if urban funeral homes may suffer because of this migration out of the major cities, who will benefit?  To some extent I think the suburban funeral homes will gain some calls as some of these people will populate those areas.

 

However, from my point of view, the funeral homes and death care providers that will really benefit from this seemingly continuing migration will be those funeral homes located in what I call Regional Centers — cities of about 100,000 – 125,000 population and the communities that are deemed America’s “Micropolitan Centers”.  They are defined by populations of 10,000 to 50,000  — and I would surmise that the larger Micropolitan communities will benefit the most from these moves.

 

As a matter of fact, a graph of the “Net Inflows” in one of the articles points out that the preferred destinations of people who are moving correlates in a reverse  correlation with the density of people per square mile.  In other words, those leaving urban centers with high densities of people are looking to move to areas of much lower densities of people.

 

From a death care perspective, the larger Micropolitan communities probably house funeral businesses that do 250-400 death calls.  Simply adding 4-5 death calls per year to the natural growth of the community is a big enough number to enhance the revenues without adding scale to the cost elements of the businesses — such as salaries, facilities, and the like.  In essence, I believe that they have the opportunity to add incremental revenue without adding incremental fixed overhead.. . . and, that is the way to greater profitablity.

 

Regional centers, where many urban people may be moving also have that same ability.  However, adding 4-5 death calls is not at the same scale for a 1,000 call firm as it is for a 250 call firm.  In addition, I think these Regional Centers may be much more prone to price-sensitive clients than those in the smaller Micropolitan areas.

 

My final take — If you are a “big city” operator with lots of overhead and people moving out of your jurisdiction, I think there are lot of challenges ahead.   Big city operators have some tools in their tool-kit to address the drop in potential call numbers — for instance, they probably have larger staffs and lay-offs can save annual operating costs.  However, the old saying is that “you can never cut your way to prosperity”.  More than likely, revenue challenges will be the most difficult to defeat.

 

Conversely, if you are operating a funeral home in a community of 30,000 to 60,000 and already growing your business with rural community retirees from agriculture areas moving into the community, you are in a great position moving forward with this ongoing migration.  The real value in your business, if this migration happens as predicted, may not be what you are doing financially today. . . . it may be in what the data suggests is going to happen in the future.

 

Related — Most Dynamic Micropolitans: 2022.  Heartland Forward

 

More news from the world of Death Care:

• Mortuary workers exposed to potentially dangerous amounts of formaldehyde.  NewsHub – New Zealand
• SIU student wins top prize in national mortuary science contest.  Southern Illinois University News (IL)
• Crematory concerns in White Marsh.  News video and print article.  WMAR – 2 ABC News – Baltimore (MD)

 

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