Death And Dollars

Sunday, July 12, 2009 •••

SECTION D

HE FOUND JOB STABILITY AS A NURSE Charlotte man spent his savings, went without health insurance to pursue a new career. 3D

MoneyWise

DEAL DIVA: Which is cheaper: grocery stores or Wal-Mart? 3D TAKING CARE: It’s tough to search for work if you’re sick. 4D

charlotteobserver.com/business

TODD SUMLIN – [email protected]

Fred Oates helped dig a grave at Oaklawn Cemetery Wednesday in Charlotte, where a survey shows the city’s average funeral costs $5,500, while cremations average $2,821.

Death and dollars With 1 company dominating the market, Charlotte leads the nation when it comes to burial, cremation costs. By Cameron Steele [email protected]

When Service Corp. International, the nation’s largest funeral-home chain, bought its biggest competitor in

high prices on Service Corp., a Houston-based company

Service Corp.’s market share

that owns more than 1,300 funeral homes nationwide,

The charts below indicate Service Corp. International’s market share percentage of the national and Charlotte funeral industries. Service Corp., the nation’s largest funeral-home chain, owns the majority of funeral homes in Charlotte.

including 60 percent of the homes in Charlotte. “It’s called controlling the market, and I hate to say

2006, it took a commanding stake in the Charlotte mar-

that it’s working,” said Tito Truesdale, co-owner of Rosa-

ket and promised to provide quality services and reason-

dale Funeral Parlor, an independent home on Albemarle

able prices.

Road in east Charlotte that competes with Service Corp.

But three years later, a new survey shows what con-

National 90% Private, family-owned funeral homes

Shawn Strickland, Service Corp.’s market manager for

7.8% Service Corp. International

sumer advocates at the time feared: Charlotte funeral

the Charlotte area, says he doesn’t believe the results of

prices have risen, making the city the most expensive in

1.4% Stewart Enterprises

the survey because he thinks that funerals in big cities

which to be buried or cremated. According to a June

0.7% Carriage Services Inc.

such as New York and Washington cost far more than in

survey by Everest Funeral, a research company that

0.1% Stonemore Partners

Charlotte. He said Service Corp. offers a wide range of

works with consumers and life-insurance companies,

prices but that the basic price for a funeral is determined

average funerals in Charlotte cost $5,500, while crema-

by the cost of that home’s overhead.

tions average $2,821.

Charlotte 60% Service Corp. International ( 6 funeral homes )

“It’s such a subjective question, because it really de-

The figure for funerals is $1,600 more than the South

pends on the family and what they want to see happen,”

Atlantic average and $1,500 more than the national aver-

30% Private, family-owned funeral homes

he said. “We don’t have pricing any much different than

age, according to the National Funeral Directors Associ-

10% Keystone Group

anyone else does.”

ation. Some local independent funeral directors blame the

SEE DEATH, 2D

Sales of Jackson items show power of collectibles His memorabilia is red-hot, and the hobby is big in a down economy. But be alert to fads, experts warn.

Once they’re gone, 401(k) matches might not return Some companies look to redirect former match money to health care, training, other benefits. By David Pitt Associated Press

By Pamela Yip Dallas Morning News

One day after the death of Michael Jackson, Heritage Auction Galleries was besieged with calls asking what his memorabilia is worth. “The general consensus is that whatever it was worth yesterday, today, it’s probably worth double, if not triple,” said Noah Fleisher, spokesman for Dallas-based Heritage, the largest collectibles auctioneer in the world. Collecting is a big business, and it’s become even more so as the recession has led many consumers to rummage through their attics and basements to see what can be sold and turned quickly into cash. Craigslist, for instance, has seen its “For Sale/Collectibles” section grow 60 percent in the last year, a Craigslist spokeswoman said. But much of collecting has to do with the emotion someone feels toward a person, object or genre, and

Source: Everest Information Services LLC and IBISWorld Inc. Research: CAMERON STEELE Charts: DAVID PUCKETT

The president of the local chapter of Funeral Consum-

BRYAN CHAN-POOL – GETTY IMAGES FILE PHOTO

Michael Jackson signs autographs for fans as he arrives at his civil trial in Santa Maria Superior Court in November 2002, in Santa Maria, Calif.

experts say that’s how you should first approach collecting. “A true collector buys items because he or she loves to collect,” not because they’re trying to make a buck, said Todd Imhof, executive vice president of Heritage and a rare coin expert. Jackson’s unexpected death creates

a surge of interest in collectibles linked to the pop legend. But the tarnish to Jackson’s image from the strange turns his life took and the expected litigation over his affairs could erode the collectibles’ long-term value, industry experts say. The value of Jackson’s memorabilia SEE COLLECTIBLES, 2D

As if we needed another sign that this may be the Great Recession, it appears some companies that suspended their 401(k) match might not restore it completely. In past downturns, most companies that stopped matching employee contributions to 401(k) accounts simply reinstated the match when the economy recovered. This time might be different. Consultants report that clients are considering options including tying their 401(k) match to profits or using some of that money for other benefits. Companies have more flexibility than most people think when it comes to their 401(k) plans. The current average match is 50 cents on the dollar up to 6 percent of pay. For example, a worker earning $50,000 a year contributes 6 percent, putting $3,000 into the 401(k) account and the company puts in $1,500. Using that average figure, companies with more than 15,000 employees can save in the neighborhood of

McCLATCHY-TRIBUNE ILLUSTRATION

$25 million a year by suspending their 401(k) match. When you’re talking that kind of money, it’s easy to see why it becomes a target in bad economic times. But potential changes coming SEE RETIREMENT, 2D

2D

BUSINESS

Sunday, July 12, 2009 •••

DEATH • from 1D ers Alliance, a nonprofit group that works to educate consumers about funeral-service options, said Service Corp.’s hold on the Charlotte market easily makes the city the priciest for funeral services. “I hate that Charlotte is at the top of the list, but I don’t doubt it one bit,” said Mary Brack. The Funeral Consumers Alliance doesn’t have a survey that compares funeral pricing in different cities, but Brack said she’s known for a while that Charlotte had to be one of the most expensive. Local Service Corp. funeral-home owners offer a variety of explanations for Charlotte’s top ranking. They said cemetery costs and property taxes are rising, and that the move toward lessexpensive cremations is forcing up traditional-funeral prices to maintain revenue. Funeral pricing varies, but experts said smaller, independent companies tend to be less expensive than larger chains because they have less corporate overhead and don’t have to pay dividends to shareholders.

Price shopping When Mamie Stowe knew she was going lose her husband, Eugene, after his two-year battle with cancer, she almost dreaded the funeral-planning process more than his passing. Stowe wanted to honor him with a church service. But she was afraid of being gouged by a funeral home that wanted to be paid upfront and paid a lot. After Stowe called around in June for quotes that were “ridiculous” and too expensive, a social worker helped her find T.H. Robertson, owner of a private funeral and cremation practice by the same name. Robertson is able to cut overhead costs by meeting customers in their houses instead of requiring them to come to a funeral home. Robertson said his prices, starting at $3,295 for funerals and $1,295 for cremations, are lower than Service Corp.’s.

DAVIE HINSHAW – [email protected]

Charlotte’s T.H. Robertson owns a private funeral and cremation practice and meets customers in their houses instead of a funeral home to cut costs.

The average price of a Charlotte funeral with Service Corp. has risen 10.5 percent to about $6,300 from about $5,700 in 2006, another Everest survey indicates. Nationally, Service Corp. funerals cost $5,097, which is about $1,200 less than the company’s Charlotte prices, according to the company’s most recent federal earnings reports. When Service Corp. bought Alderwoods Group Inc. in 2006, the U.S. Federal Trade Commission forced it to sell one of the five Charlotte funeral homes it had acquired. The FTC’s decision reduced Service Corp.’s share of the Charlotte-Gastonia-Monroe market to 44 percent from 62 percent and attempted to prevent the merger from raising funeral prices. But Service Corp. still owns six out of 10 Charlotte funeral homes, and prices have climbed in the years since the merger. Nationally, Service Corp. controls only 7.8 percent of the funeral industry, with 1,302 funeral homes and 369 cemeteries. The company has its largest presence in Charlotte, owning Harry & Bryant Funeral Home, Forest Lawn West Funeral and Cremation Service, all of the McEwen Funeral

Service locations and Wilson Funeral and Cremation Service. “Charlotte is unique,” said Mark Duffey, president and chief executive of Everest. “Usually you don’t see that level of consolidation, which is what makes (funerals) so expensive there.” Everest is a national research company that helps clients to compare funeral prices and create a customized funeral service with the home of their choice. Consumers pay $495 for unlimited access to Everest specialists and research data or get help from the company as a life insurance benefit through their employers. The survey is based on a six-month national study that looked at basic funeral prices of homes in a 10-mile radius of each city. Brandon Cook, manager of Service Corp.-owned Forest Lawn Funeral Home said Charlotte’s high taxes and cost of living escalate the area funeralhome prices. But that still doesn’t explain why Charlotte ranks first on the list of most expensive cities for funerals while major cities with comparable or higher costs of living rank significantly lower – Washington is 12th, New York is 15th and Houston is 20th. Service Corp. funeral managers al-

COLLECTIBLES

What to look for

RETIREMENT

• from 1D

Here are some questions to ask yourself when evaluating whether items could be collectibles:

• from 1D

will spike for about a year or two and then most likely will settle back, Fleisher said. “Autographs and items from Michael’s prime will prove to be the most valued and cherished by fans looking to collect anything related to the legendary singer,” said Doug Norwine, director of music and entertainment auctions at Heritage, which will feature Michael Jackson materials in its September auction. Norwine said collectors should keep in mind that a flood of Michael Jackson collectibles in the market could lessen their value. “Rare, authenticated pieces, Thrillerera autographs, video-worn costumes and personal mementos will always be prized,” he said. No matter what you’re collecting, there are some overall rules of thumb to follow. Perhaps most important: Educate yourself about the collectible. “In the 20-plus years I have been working with collectors, I’ve observed that almost without exception, the most successful people are those who truly immersed themselves into their chosen field,” said Imhof, who collects fine wines and Olympics memorabilia. “They read everything they can about their area of interest, attend trade shows, develop business and social relationships with experts and dealers and essentially become world-class experts in their own right.” Realize that every collectible item will have distinctive characteristics, and your criteria for judging its value will have to

SPORTS ITEMS • Was there limited production of the item, such as baseball cards? • Has the player made it into the sport’s Hall of Fame? • Is it the player’s rookie card? • Has an autograph or sports item been authenticated? POP CULTURE • How popular was the person? • How often did he or she sign autographs? • Are these items associated with the person’s peak of his or her fame? Have they been authenticated? TOYS • Are they in pristine condition, in their original sealed boxes? • How deeply do they evoke longheld childhood memories? Source: Dallas Morning News

take that into account. For example, David Widener, a collector in Waco, said that with sports cards, “I recommend buying vintage cards over the modern and current products” unless there is a limited supply of the current product.” In other words, the scarcity of an item is a key component of value. But make sure that scarcity comes with demand, because the two don’t always go hand in hand.

charlotteobserver.com • The Charlotte Observer

so point to Charlotte’s high cremation percentage – 30 percent of Charlotte’s deceased are cremated – as the reason for escalating burial costs. Cremations appeal to people everywhere because they’re cheaper, said Cook, but they are particularly popular in Charlotte because of its transient population. “If people want to be here only for a brief amount of time, they will be able to take their loved ones with them when they move,” Cook said. The shift from high-cost burials to cremations threatens revenue for the funeral industry, which can force overhead prices to go up. But that doesn’t explain why Charlotte outranks all other cities for funeral expenses because cremations have been on the rise nationwide, attributing for 37 percent of the industry. Financially squeezed families that are going ahead with burial plans are opting for less formal services. That means cutting out limousine rides, purchasing less ornate caskets and in some cases putting off tombstone purchases, funeral industry experts say.

Tips on choosing a funeral home • Ask for a list of general prices. • Ask what is included in the funeral service fee and what cemetery costs will add to that fee. • Know that you can negotiate. • Find out whether the home is corporation-owned or independent and which one offers the type of service you need. • Go to different homes around your area to compare price lists. Go to www.funerals.org for help from nonprofit group, Funeral Consumers Alliance.

Five most expensive cities for funerals Average cost Traditional Cremation 1. Charlotte $5,500 $2,821

from Washington have some companies in limbo. Many companies might not restore the 401(k) match until they find out how much health care will cost them, said Mark Ritter, an executive director at business consultant Grant Thornton LLP. “Right now there’s a lot of fear about what the rules will be and what’s the cost,” he said. “The thought is, we may have to rob Peter to pay Paul and, depending on how the health care initiative impacts our company, we might have to get the money from the 401(k) match.” For companies thinking about tying the match to profitability, simply committing to contributing more to the match in good years and less in bad years is the most flexible option. Another is to promise a certain level of match if the company hits specified profit targets. That’s what cell phone company Sprint Nextel has chosen to do. The Overland Park, Kan.-based company suspended its 401(k) match as of March in a broader cost-savings plan. Spokesman James Fisher said the company will make future contributions on a profit-sharing basis. “If our performance is above ‘X’ level, a specified amount of money from the extra performance will go into the 401(k) match,” he

$5,046

$1,878

3. Nashville

$4,983

$1,941

4. Louisville $4,963

$2,138

5. Boston

$2,311

$4,958

Source: Everest Funeral survey

Antitrust accusations Service Corp. has run into antitrust accusations before. In 2005, the Funeral Consumers Alliance filed a class-action suit against Service Corp. and other major players in the deathcare industry. The suit alleged the companies conspired to overcharge customers on caskets by suppressing competition. While not dismissed, the case has not gone forward. In 1999, Service Corp. faced charges from the New York state attorney general that the company was dominating the Jewish funeral home business there and hurting consumers by raising funeral prices. Service Corp. settled out of court, agreeing to sell three of its Jewish funeral homes and pay the state $1.2 million for the investigation. Service Corp. also received civil-investigation demands in 2005 and 2006 from the Maryland attorney general about alleged anticompetitive practices in the funeral industry there.

2. Chicago

Barak Richman, a professor at Duke University School of Law, said restrictions are put on monopolies because they can pose harm to market competition. “When all services in a market are dominated by a single provider, output goes down and prices go up,” he said. “But if a monopolist charges higher prices, that should theoretically allow other people to enter the market and provide services at a lower cost.” Strickland said Service Corp. does not have a monopoly of the Charlotte area and has continued to meet the needs of residents during their times of grief. “I don’t want to see you come in when you’ve had a death and have to spend a lot of money,” he said. “We can customize the service to fit any budget.” — STAFF RESEARCHER MARIA DAVID CONTRIBUTED.

No more 401(k) match? Try these tips Human resources consultant Hewitt Associates suggests: 1. Save more. The average employee can bridge the savings gap a company 401(k) match suspension creates by boosting his or her contribution by just 3 percentage points a year. 2. Diversify assets. Make sure you diversify your portfolio by regularly rebalancing your asset allocation. 3. Don’t cash out. Research shows nearly half of workers cash out their 401(k) plans when they leave a job. You will forfeit 20 percent or more of the account value in federal taxes and you may be subject to 10 percent in early withdrawal penalties. — ASSOCIATED PRESS

said. “If we don’t meet that level, there won’t be any contributions for this year.” Sprint Nextel had been matching dollar-for-dollar an employee’s contribution up to 4 percent of pay. Depending on what your company decides, you might see a smaller match. In exchange, the company might put some of the money into a health savings account, workplace improvements, or education and development programs.

The Pension Rights Center, a Washington-based consumer advocacy group, said it’s tracking more than 280 companies with suspended or reduced retirement plan company matches. A string of companies began announcing suspensions or reductions in June 2008, and the trend continues. The list of companies includes widely recognized names such as Sears Holding Corp., Starbucks Corp. and General Motors Corp., as well as nonprofits such as Public Broadcasting Service, the Portland Art Museum and the American Red Cross chapter in New York. The Pension Rights Center is concerned that retirement benefits may become a casualty of the recession as companies look to permanently reduce costs. “Unfortunately, we’ve seen this trend over the past 20 years where companies are increasingly getting out of contributing to their employees’ long-term well-being plan, whether it’s a pension or retirement income or health benefits,” said Nancy Hwa, the center’s spokeswoman. So, why are companies changing directions now? They’ve reaped the savings, why not restore the match once profitability returns? It appears one lasting effect of this deep recession is that it’s changed the mindset of many business executives, said Ritter. “People realize that the floor can fall out from under them now and they want to stay loose,” he said.