The complex public health laboratory (PHL) system in the United States provides and assures a wide range of services and activities. The PHL system has been particularly impacted by the austerity measures imposed on government public health during the economic downturn during 2008-2011. While overall funding remained fairly stable during this period, the sources of funding are transitioning from tax-supported to fee-for-service revenues. In addition to shrinking financial resources, PHLs are adjusting to devoting a larger part of their budgets to employee benefits, especially medical insurance. The cost of maintaining and adopting technology to meet the current needs is also a challenge. Finally, the entire laboratory workforce is suffering from a lack of new graduates into the profession. The Centers for Disease Control and Prevention and the Association of Public Health Laboratories have partnered to introduce the Laboratory Efficiency Initiative to provide tools and resources to the PHL system to survive these challenges. PHLS have responded to the challenges by closing laboratories and specialty reference services, developing capacity to bill for some testing, postponing investment, strengthening performance improvement efforts to gain efficiencies, and participating in the laboratory professionals workforce. The changes imposed by budget and workforce challenges mark an age of transition, not extinction, for the PHL system.