FORTUNE — If it feels like you haven’t gotten a real raise in years, you’re not going crazy. The statistics back you up:
This chart, from Doug Short, shows inflation-adjusted hourly earnings going back to 2006. Aside from a jump during the recession, which was the result of employers firing people and cutting back on their hours rather than giving actual raises, the average American hasn’t seen his pay go up substantially at all. And this trend more or less goes back to the dotcom bust of the early 2000s.
There are several reasons why the average American hasn’t seen a pay increase in years, but consistently high unemployment is at the top of that list. With so many people out of work, employers simply have no incentive to give raises. And it doesn’t appear that this problem will be going away anytime soon.
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But economists at the Federal Reserve Bank of New York recently highlighted new research that shows that may not be the case. According to this body of research, the fact that a substantial portion of the unemployed has gone without work for 27 weeks or more (the BLS pegs this at 35.8% of the total unemployed population) means that there’s actually a lot less slack in the labor market than we had once thought. In other words, as employers stop considering the long-term unemployed as viable job candidates, the available pool of talent has shrunk, giving those still in the game more salary negotiating power.
Economists call the inverse relationship between wages and the unemployment rate the “Phillips Curve,” and in recent years there was some confusion over why such high unemployment hasn’t lead to even more wage stagnation — or even declines — than what we’ve experienced.
Capital Economics’ Paul Ashworth has recently looked into the phenomenon as well, and shows that, if the Phillips Curve still holds, we should see significant wage growth in the coming years. He writes:
“As [the chart below] shows, if the historical Phillips curve type relationship held, then the decline in the unemployment gap, which is the gap between the actual unemployment rate and the estimated longer-run equilibrium unemployment rate, would drive the growth rate of average hourly earnings steadily higher over the next couple of years.”
The good news is that we may see our wages rise in coming months. That will be great for economic growth, as workers will then have more money to spend. The bad news is that there’s a huge percentage of our population that has been detached from the economy by the financial crisis of 2008. And this research suggests that many of them will never find their way back to gainful employment.
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