You learn something new every day. You're correct . . . if you live in New Jersey. (Though it's confusing--you listed this as financing in Irvington, New Jersey, but you say you currently live in California):
Interest on your security deposit
The Rent Security Deposit Act requires landlords who rent 10 or more apartments to place tenantsâ€™ security deposits in either an insured money market fund or a federally insured bank account. The account must pay a rate of interest set at least quarterly and equal to the average rate of interest paid by the bank on money market accounts.
These higher interest accounts must be in New Jersey-based institutions. Cite: N.J.S.A. 46:8-19(a).
The law requires landlords who rent fewer than 10 apartments to place security deposits in bank accounts that pay at least the regular rate of interest. Cite: N.J.S.A. 46:8-19(b).
Whichever type of account your security deposit is in, all of the interest earned on it is yours. The law no longer allows the landlord to keep any amount to cover his or her administrative expenses. Cite: N.J.S.A. 46:8-19(a).
The law now requires that the interest earned on the deposit must either be paid to you in cash every year or subtracted from the amount of rent you owe on the renewal or the anniversary of the lease. This must be done either when your lease is to be renewed or on January 31 each year. (The landlord must give you a written notice that he or she will be paying you on January 31 of each year instead of the date your lease is renewed.) Cite: N.J.S.A. 46:8-19(c).
The question then is: What interest rate should you receive? Though what I've excerpted above is a summary of the actual law--not the law itself--it appears that the rate could vary slightly depending on whether your landlord is renting 10 or more units.
Here's the Federal Reserve page with all that information: http://www.federalreserve.gov/releases/h15/data.htm
And, yes, interest rates do change. Example: Mortgage rates now are about 4%. I remember back in the late 1970 when they were around 17%. I remember when savings accounts paid 5% on your money. Now you're lucky to get 1%.
However, you're really not talking about a huge amount of money. I won't do it year-by-year, and I don't know whether your landlord rents 10 or more units. But let's assume that the average interest rate from 2004 to 2011 has been 3%. If that'd been in the bank, you'd have earned $615. If it had been paid back to you annually, you'd have received a check (or a rent credit) of $15.
One suggestion: Don't be confrontational with your landlord if you do raise this issue. Obviously, you've been a dependable tenant. And apparently your landlord has been good enough that you've continued renting from him for 7 years. You probably wouldn't want to jeopardize that relationship over a relatively small amount of money.
Hope that helps.