Ben Tal on AI & Jobs: Blue Collar Will Be the New White Collar

Artificial intelligence could have a profound impact on the office market, with the potential for entry level white collar worker roles to be replaced by AI. Blue collar jobs, meanwhile, will remain largely unaffected.

That’s the essence of what CIBC World Markets Deputy Chief Economist Benjamin Tal told CBRE Canada President and CEO Jon Ramscar during a wide-ranging conversation about the economy and the outlook for Canadian commercial real estate at the CBRE Capital Lenders’ Forum in Toronto.

 

 

“I think with AI it’s a case of overestimating (its impacts) in the short term and underestimating them in the long term,” Tal said. “The changes will not be as rapid (as suggested), especially in the office space.

“But some say, and I tend to agree, that in many cases, AI will lead to a situation in which blue collar is the new white. Namely, you might replace a junior accountant or a coder, because AI can do (those jobs). But you cannot replace a plumber or electrician with AI. So blue will be the new white.”

AI itself won’t take those jobs away. Rather “the person who uses AI correctly, and in an optimal way” will. “You cannot stop it and not everybody will be a winner.”

K-Shaped Recovery

Until recently, Tal noted, the economic recovery was taking an E shape, with higher and lower income brackets moving in the same direction.

“Now we're talking about a K-shaped recovery. The spread will widen. The income gap, the wealth gap, will widen. Some will not be part of [a changing economy], and that's why, as a government, as a country, we have to wake up to it.

“The labour market is changing at the speed of light. And the education system is behaving like nothing’s happened. The only way to minimize decay is to change education.”

There will be a segment of the population that won’t benefit from the AI revolution, Tal said, “and I will not be completely surprised if five years from now we could be discussing minimum income guarantees in this country.”

“But I think that the overall impact of AI will be extremely positive. It will lift the ability of this economy to grow. The speed limit of the economy will grow. But as you adjust, the adjustment is full of surprises, and that's exactly what we're seeing now.”

CUSMA Renegotiations Loom

Ramscar asked Tal about another hot topic: renegotiation of the Canada-US-Mexico Agreement (CUSMA). “What would be the economic consequences if CUSMA is not renewed?”

U.S. congressional mid-term elections are fast approaching, Tal noted. “And what (does the Trump administration) have to show for it? The unemployment rate is rising. The labour market is softening. Inflation is still elevated.’”

The recent Supreme Court decision that the administration cannot use emergency powers to impose tariffs on countries such as Canada is a sign of growing challenges to the Trump agenda. “Therefore I believe that time is not on his side. If he didn't kill CUSMA up until now, he will not kill it.”

Tariffs are here to stay, Tal stressed. “The only question is, at what level? Yes, the Supreme Court killed (the use of) the Emergency Act, but (Trump) has all kinds of other things he can do, and he will. But each alternative is less powerful than before. So he’s not powerless but he is less powerful.”

At the end of the day, Tal said, CUSMA will be renegotiated, and “it will be narrow but deep. So if I'm the lumber industry, I worry. If I'm dairy, I'm very worried. If I'm energy, even aluminum, I’m less worried. The U.S. needs aluminum.”

“So should our strategy be one of just slowly let time play out, let resistance build?” Ramscar asked.

“That's exactly my message,” Tal said. “Today the effective tariff rate is about 8%. Because ~85% of our exports are tariff free under CUSMA. I don’t think (the new rate) will be all that different from that. Maybe around 10%

“Again, some sectors will feel the pain, unfortunately, and the government will have to help them. But is it manageable? Absolutely manageable. And therefore I see 2026 as a transition year between something bad and something much better in 2027.”

Canadian Economy Growth

There’s a lot of negativity about the growth of the Canadian economy, Ramscar said, seeking Tal’s take.

“Economic data can be very misleading,” Tal said, pointing to Q3 GDP in Canada coming in at 2.5%. “I speak to politicians and they say the economy is doing great. No, it's not.

“GDP went up not because of consumption, not because of investment, not because of government, not because of exports. But because of the fact that imports went down… and for the fourth quarter we're talking about (the possibility of) a negative GDP environment.

“So the economy is not strong by any stretch of imagination.”

Canada is actually in a recession, he added, “and we have to do something about it. One thing is to keep interest rates low. In fact, I believe the Bank of Canada should cut rates, but they will not. But at the minimum, don't raise rates.”

What Ben Is Bullish On

Asked by Ramscar what sectors he’s bullish on, Tal cited high tech and energy, plus commercial real estate.

“I'm very bullish on quality: quality retail and quality office space will do extremely well. And I'm totally with you about industrial (being a strong performing sector, which CBRE discussed in opening remarks to the forum). I think that the slowdown in (industrial) rents is not reflective of weakness. It's actually that the fundamentals are relatively strong.

“Even the housing market is actually starting to improve,” he added. “The low rise segment of the market is starting to show some positive signs. Rent is starting to stabilize. The condo market is in a recession, and we need to support the condo market. But most of all (we need construction of) purpose-built rental.”

Boosting Canadian Productivity

Tal acknowledged that while it’s difficult to predict what will happen to Canadian productivity, “I can tell you one thing. We will not close the gap with the U.S. That should not be the goal, because let's face it, if you come up with a major app, something brilliant, where are you going to market it? In the U.S., because of its size and scope.

“So it's very difficult to close the gap with the U.S., but we have to maintain the gap. I think it's going to happen, not because we are going to change, but because the environment will change.

“We used to have globalization. Now we have de-globalization. We used to have just in time inventories, now we have just in case inventories. We used to have a labour market that was giving, now it’s tight. All those forces are doing one thing. They are putting downward pressure on profit margins.”

If you’re the CEO of a company, Tal said, you have two options. “One is do nothing, the other is do something. And this something will be to replace labour with capital. And the AI revolution is positioned perfectly to take advantage of that. So I'm not looking at productivity vis a vis the U.S., because they will have the same forces (at play) and they have the scale.

“But I think we are going to go from negative to positive productivity, and the AI revolution will be part of it.”

Solutions Are In Front of Us

Ramscar concluded the discussion by concurring with Tal that 2026 “will be a transition year as we embrace change. As Prime Minister Mark Carney said, ‘Nostalgia is not a strategy.’ We cannot hold on to the past.

“Canada’s commercial real estate fundamentals have proven to be stronger and more resilient than the perceived disconnect in the markets. While challenges remain, the opportunities ahead are becoming increasingly clear. And we must adapt.”

“All of us in this room today share a profound responsibility to contribute to the fabric of our nation,” Ramscar said. “The solutions are in front of us. The Canadian way is rooted in collaboration and long-term relationships – relationships that hold us accountable to deliver what we promise.

“So let’s meet this opportunity head on, evolve together and advance the prosperity agenda for our industry and our country.”