More likely scenario is that a lot of small business would fail. There are many businesses that can not support higher wages. Fast food springs immediately to mind.
Dear presidio9,
"More likely scenario is that a lot of small business would fail. There are many businesses that can not support higher wages. Fast food springs immediately to mind."
Perhaps some might fail in the short term.
Regarding the case of fast food restaurants, let's look at what would happen if there were no illegal immigrants willing to work at very low wages, and there were insufficient legal workers to work at, say, minimum wage.
What would happen is the need to increase overall compensation would put pressure on profits and prices. In areas where the economy is reasonably good, most owners could recoup part of the increased costs by raising prices. Where I live, in the Washington area, this happened years ago. Most fast food places pay above minimum wage.
Of course, if economic conditions don't permit passing increased labor costs along, then it's likely that you'll find more workers at the lower wages.
But where a structural gap occurs in the existing labor force (prices that the business can charge won't cover the increased labor costs required to attract enough workers), the long-term answer isn't to import workers illegally. The long-term answer is that the folks who run these businesses have to find new ways of doing the work where they can find enough workers to do the job, while keeping their prices low enough that folks will still purchase their products and services.
If the problem is that not enough folks will work at the fast food joint for minimum wage, and the owner can't raise prices to enough to cover increased labor costs, then the owner must find new ways of delivering the same products and services with fewer workers. Might mean a greater investment in automation, or having to re-invent the work processes.
It might mean that the cost of fast food will rise a bit, reducing the overall amount of fast food that gets sold, driving some providers of fast food out of the market, and folks will just have a couple fewer McDonald's and Burger Kings to go to. Because there will be fewer fast food places, there will be fewer positions to fill, somewhat ameliorating the increased wages to be paid to attract a sufficient number of workers.
In terms of places like this meat packing plant, it will mean that the price of pork chops will go up a nickel a pound to cover wages and benefits that will attract enough legal workers to take the jobs.
In terms of services like housecleaning and nannies, it may mean that fewer of the comfortably affluent will be able to afford this luxury, or that they may have to eat out at the fancy French restaurant one time less per month. Oh well.
Every business wants to try to be price competitive, and will look for ways to be more price competitive. When times are rough, businesses can squeeze a little harder on the costs of labor. When times are good, businesses have to scramble to balance attracting decent workers and maintaining profitability. Without innovation, many businesses will fall behind as the innovators find ways of doing more (increasing productivity) with the same workers.
Permitting almost unlimited illegal immigration to provide an easy way to suppress wages and benefits is not a legitimate way for businesses to keep their labor costs down.
sitetest