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I see the long term atmosphere as good but in the short term I do think it would be fairly chaotic. Wages would have to be raised rather quickly to attract legal workers to avoid shortage of certain items like vegetables. Basically anyone using illegals would be in a bind unless they shelled out a legal wage in short order. I am sure most would do that and if they cannot operate successfully and legally then their operation should fail.
Short-term would be rough for some people, especially if they used a lot of illegal labor. It would balance out in the long-term, however.
Reality check: We would still have close to a million of our own citizens behind bars...
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