Doing the feds' job for them
The threat that a business which hires illegals losing its license to do business that it is serious enough that the businesses where this kind of hiring happens most frequently (certain agricultural operations, certain construction businesses, and certain restaurants) can't afford to lose their license. They will be more likely to insure that their new hires are legal. There is great argument, of course, over whether our immigration quotas as they pertain to Latin America are too strict. It is the job of the federal government to set immigration quotas and enforce those quotas.
The State of Tennessee does not enjoy, under the terms of the present Compact with the federal Union, the right to determine the quota of immigrants which may enter and leave either the United States or this State. If, however, the federal government violates the Compact by failing to execute the laws of the Union, the State is free to take such measures necessary to execute those laws.
The federal government has violated its Compact with the State of Tennessee by failing to fully enforce federal immigration law. The State of Tennessee is now forced to take action to enforce the laws which the federal government refuses to deal with. This business license proposal is the most effective manner that the State has at its disposal to date. It will not eliminate the problem, but will dramatically increase the cost of doing business for those employers who insist on continuing to violate the law.