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KAI RYSSDAL: This past spring, with the November elections still half a year away, it sure looked like immigration would be one of the issues. Congress was making noise about it. The president, too. But nothing really happened.

There is a new 700-mile fence that's been approved for the Mexican border. No money to build it though. Not much else to speak of at a federal level. So the states have been listening to voters' Real Agenda. Colorado has illegal immigration initiatives on the ballot. So does Arizona. Again. Claudine LoMonaco reports from Phoenix.

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CLAUDINE LoMONACO: Welcome to Arizona, Immigration Ground Zero. The state is the busiest entry point for illegal immigrants in the country and home to the highest percentage of undocumented workers.

Two years ago, voters here passed Proposition 200, one of the toughest anti-immigration initiatives in the country. But it ran into legal and bureaucratic roadblocks.

This year, a cadre of conservative politicians are trying again. They've introduced initiatives to deny illegal immigrants bail, English classes and in-state tuition rates. The efforts are scaring employers and workers.

Today, about 100 people who run construction companies pack a banquet hall in the Phoenix Country Club. They've come to hear immigration employment lawyer Julie Pace. One of her top rules? Make sure all employees have documents that at least look real.

JULIE PACE: If Arizona is spelled wrong on an Arizona driver's license, you get to hand it back.

Pace's other key rules? Never ask a worker's immigration status. That can open you up to a national origin discrimination lawsuit. And don't take the government's advice and Xerox worker IDs. That only makes it easier to prosecute you later.

Pace is a guide to how businesses can comply with federal law given that as many as 1 in 10 workers here are probably illegal. In construction, as many as half of all Arizona's workers could be.

Come January, the federal Immigration and Customs Enforcement agency has promised to crack down in Arizona, says Pace.

PACE: Arizona is the border state and the key point for a lot of human smuggling, so all of a sudden all the national interest looks to Arizona as either solving the problem or "What are they doing legislatively? Or what are they doing to address the employer sanction issue?" So they started to marshall the government enforcement authorities to move towards Arizona.

That makes Julio, a superintendent at a Phoenix construction company, nervous. I agreed just to use his first name since he's pretty sure some of his workers are illegal.

He attended one of Pace's workshops, and knows not to ask workers their status. But he can tell just by sending crews into areas heavily guarded by Border Patrol.

JULIO: There's always a few guys that come back saying that they're sick the next day, or that they don't have a babysitter. They're not necessarily telling me that they can't go, but you can sense fear on it, and that they want to stay away from it.

Outsiders might think that Arizona is flush with cheap labor. But it isn't, says employment lawyer Julie Pace.

PACE: Most of our companies can't grow, and they haven't been able to grow for two years because they don't have enough workers. There's been a larger labor shortage in Arizona for years. And most of the companies are experiencing even more of a labor shortage. One thing that did happen after Prop 200 is some of the workers who would normally stay in Arizona and work just pass on through.

That's just fine with Randy Pullen, a Phoenix land developer. This key player in Arizona's anti-immigration movement says the larger goal is to get illegal immigrants to go away. He helped draft Arizona's proposition to deny them public services two years ago.

RANDY PULLEN: The intent was to make sure they understood that the welcome mat in Arizona essentially was being lifted up and taken in the house.

But it isn't as simple as that for most Arizonans. Earl de Berg is one of the state's leading pollsters. He says that Arizonans want secure borders, but:

EARL DE BERG: At the same time most favor, about 73 percent actually, favor a program which would create immigration law that would allow immigrant labor to enter legally the United States, work, and then return home.

In other words, Arizonans don't like the idea of people breaking the law to be here. But that doesn't mean they want to get rid of undocumented workers. They just want a legal way for them to stay.

In Phoenix, Arizona, I'm Claudine LoMonaco for Marketplace.