This is one of those laws that's kind of like speeding in cars. To actually enforce it 100% of the time would require the sort of enforcement that people would not be very happy with. With immigration, it'd mean living in a "papers, please" kind of country. The best way to deal with immigration is to make it cheap, legal and easy for people who just want to work:
No one would walk miles through the Arizona desert if it were easy to do things legitimately - the only people sneaking around would be actual criminals.
That's the thing, you don't have to enforce any law 100%.
You start enforcing it for the most egregious cases and others get a little more hesitant to break the law. Then you do it again and more back off. At some point, you reach a happy medium where there's "enough" enforcement that egregious cases are rare and punished heavily while the rest aren't worth punishing.
I don't think so. Other countries don't have a problem enforcing their immigration policies. When someone is found to be overstaying they deport them. Try overstaying in Japan, China, Greece, France, etc. They may not get 100%, but they get a good percentage as companies are required to vet the work status of employees and regular police in many places can inquire about visas, if they have reason to ask.
They have plenty of trouble keeping 0% illegal immigrants. It's not possible in a free society.
Greece, however is a good point: if you make your economy bad enough, no one will want to go there. This worked for the US during the recent recession.
I'd like to live in a Papers, please kind of country if it means competition for my field of work is drastically thinned.
Hell, I'd help the law with tips myself if it meant companies would be forced to increase wages as the market forces shake to accommodate decreased supply.