The Downside Of Welfare Reform

(CBS)  Barbara Habeck thought she had broken the welfare cycle, until she opened up her paycheck one Friday last April.

It was, she says, "the hardest day of my life."

A single mom and school cook in northern Minnesota, Habeck was laid off.

"It made me throw up in the parking lot," she says. "I opened up that check and there was that notice and that's all it took."

Until then, Habeck had been a welfare reform success story, moving from welfare to work.

Now, as CBS News Correspondent Jim Axelrod reports, she and her kids are living in a homeless shelter.

"If I didn't live here, I'd live under that bridge," she says.

She's looking for work, often taking two buses with the kids she babysits to the job center. But after some two dozen applications Habeck still can't find a job.

She applied for everything from a convenience store clerk to an overnight adult bookstore clerk.

Welfare reform was conceived and implemented in the mid to late 90s when the economy was booming. It was an unprecedented success because most everyone looking for a job could find one. But that was then. This is a very different now.

"There has been a growth in the number of families who aren't working and aren't receiving any welfare," says Mark Greenberg, with the Center for Law and Social Policy.

Secretary of Health and Human Services Tommy Thompson insists that help is there for anyone who needs it.

"We think there are plenty of jobs that are still available," he says. "You can look at the welfare rolls, they've gone down by 60 percent and those people are working."

Caseloads are down 60 percent in the last six years. But don't think all those people left welfare for work. In fact during the economic downturn between 2000 and 2002, of the 1.3 million families who left the welfare rolls, more than half were unemployed.

"We see the economy improving and we see the caseloads still declining and we see people like Barbara who are under the same circumstances getting a job and improving," says Thompson.

"If I can just get a chance, one chance, I'll make it work right," says Habeck. "I know I will."

But these days in this economy, chances are harder to come by.