How the licensed funeral director shortage affects funeral home values

Ask an owner what worries them most about the next five years and many will say staffing before they say cremation. The concern is reasonable, but the national numbers are less dramatic than the convention talk, and the pressure falls unevenly by region and by firm. This guide looks at the supply of licensed directors as a market force: how many are being trained, where vacancies stay open, what new licensing rules add, and how that shows up in what buyers pay. For the other forces shaping the market, see the market hub.

Is there really a shortage of licensed funeral directors?

Yes, in the sense that the profession must replace a large share of its workforce every year while schools graduate a limited number of new licensees. The gap is sharpest where the work is hardest to recruit for.

The Bureau of Labor Statistics counts 61,500 funeral service jobs in 2025 and projects about 5,600 openings a year through 2035. Growth is modest, at 4% over the decade; most openings come from people who change careers or leave the labor force, including retirements.

The training pipeline is smaller than that number. ABFSE’s 2025 annual report summary, covering 58 accredited programs, reports 1,910 graduates. Not every BLS opening requires a mortuary degree (the category includes managers and arrangers), but the comparison explains why owners struggle to hire licensed help.

Source: ABFSE Annual Report Summary Information, 2024 and 2025.

Who is entering the profession now?

Mostly people without a family firm behind them. That changes both who will buy small funeral homes and how many owners will find a successor inside the family.

In ABFSE’s 2025 data, only about 15% of graduates reported a parent, spouse, sibling, in-law, or other relative in funeral service, and under 10% of new enrollees did. More than three-quarters of graduates were women. About 38% were 31 or older, a sign that many are entering as a second career, and nearly 39% of new enrollees had already worked in funeral service before starting school.

For sellers, the family-succession point matters most. A 2021 NFDA survey cited by KFF Health News found 27% of owners planned to sell or retire within five years. If fewer graduates come from funeral families, more of those owners will sell to outsiders. Our guide to seller supply and buyer demand looks at whether there are enough buyers for that wave.

Where are vacancies hardest to fill?

In small towns and remote regions, where low volume, long drives, and constant on-call duty meet a thin local labor pool. Urban and suburban firms compete on pay; rural firms often compete just to get applicants.

Funeral Director Daily reported in November 2025 on a funeral home in Cloquet, Minnesota, owned by Foundation Partners Group, that announced it was being selective in the services it provided while it searched for a director. The manager described how hard it is to recruit to rural areas. A consolidator owning the firm did not solve the problem; a partner location about 21 miles away helped cover. For a rural seller, the lesson is to show a buyer exactly how nights, weekends, and vacations are covered today, and by whom, before the buyer has to ask.

That example shows how buyers think about rural firms. Staffing is part of the reason rural and urban firms draw different buyers, covered in rural vs. suburban vs. urban funeral homes. A shortage of directors can also push a marginal location toward closing, which our guide on why funeral homes are closing discusses.

How do new licensing rules change the labor supply?

They can shrink it in the short run. When a state requires licenses for roles that were unlicensed, people already doing the work must qualify, and firms lose flexibility to fill gaps with unlicensed staff.

Colorado is the clearest current case. Under SB 24-173, from Jan. 1, 2027, a person may not practice as a funeral director, mortuary science practitioner, embalmer, cremationist, or natural reductionist without a license. The law provides a provisional path for people already practicing who apply before the deadline, and from 2027 each establishment’s designee must be a licensed funeral director or mortuary science practitioner. Details and later amendments are on our Colorado funeral home broker page.

Other states are tightening inspections and enforcement too. The broader pattern is covered in tougher state funeral regulation after Colorado.

What is the shortage doing to wages?

Pushing them up where recruiting is hardest, and widening the spread between markets. National medians are a starting point, not what a buyer in a tight market will actually pay.

BLS puts the May 2025 median wage at $78,790 for funeral home managers and $55,010 for morticians, undertakers, and funeral arrangers. The spread around those medians is wide: the lowest-paid tenth of managers earned under $49,700 and the highest-paid tenth over $156,400, while for morticians and arrangers the range ran from under $33,350 to over $88,620.

That spread is where the shortage shows up in a deal. A seller whose staff earn near the bottom of the range may look profitable, but a buyer who expects to raise pay to keep those directors will lower its earnings forecast. A seller already paying market rates gives the buyer fewer surprises. We see buyers ask for payroll registers and recent offer letters specifically to test this.

How do buyers price staff depth?

Through the earnings they model, not a separate shortage discount. A buyer asks who will be licensed and working the day after closing, what it costs to fill any gap, and what wages will do over the hold period.

Large buyers say plainly that licensed staff are a constraint. SCI’s 2025 Form 10-K lists the ability to attract and retain licensed funeral professionals as a risk factor and states that “the stringent licensing standards required for funeral professionals under various state regulations create a significant barrier to entry and make it especially challenging to find qualified talent.”

The numbers in that example are small next to what happens when no replacement can be found. That is why, in our experience, the bigger effect of the shortage is on structure: holdbacks tied to staff retention, longer seller transition roles, and fewer buyers bidding for firms that cannot show who will run them.

What should sellers and buyers do about it?

Sellers should document the licensed team a buyer is getting; buyers should confirm it before they price it. Neither should rely on national statistics to judge one firm.

For sellers, that means a staff roster with every license number and expiration date, years of service, who directs and who arranges, and any retention or employment agreements. Building that team, if you do not have it, takes years and is covered in developing licensed staff and reducing owner dependence. How many licensees a firm of your size needs is a separate question, covered in our guide to staffing ratios and calls per director.

For buyers, interview key staff before signing, budget for local wage levels rather than national medians, and have a plan for the director in charge on day one. The shortage rewards buyers who secure people first and set the price second.