Nearly 10 per cent of Tauranga City Council staff are earning less than the living wage.
Sixty-five of the council's 661 staff earned less than the new living wage for 2017 of $20.20 per hour.
"Local authorities should be setting an example," local Closing the Gap spokesman Peter Malcolm said.
"When you look at most of the income stats for New Zealand, we are behind most of the rest of the country.
"The council needs to reconsider this issue, particularly given the increasing number of local authorities that are now taking their moral position seriously."
Mayor Greg Brownless said he wanted to know what Tauranga ratepayers thought of introducing a living wage, as they would be paying for it.
"It's a difficult question, and there are many valid opinions. Any wage or salary increases are met by ratepayers," he said.
"Some ratepayers earn less than the living wage themselves, so is it fair to put the extra costs of a living wage on them?"
The new rate of $20.20, which was calculated by the New Zealand Family Centre Social Policy Unit, would officially come into effect on July 1. The rate for 2016 was $19.80.
More than half of council employees earning less than the living wage worked in libraries.
Tauranga Green Party candidate Emma-Leigh Hodge said paying less than the living wage was unacceptable, and the council needed to reconsider its policy.
"We need our representatives to show leadership, but right now Tauranga City Council is lagging behind and dismissing the needs of its community," she said.
There are more than 60 accredited living wage employers in New Zealand, and Wellington City Council recently voted to join them.
Wellington City Council had been paying its own staff a living wage since 2013, but contractors were also to be included in this from July 1.
Auckland Council planned to implement a living wage over the next three years.
Ms Hodge said other councils and government organisations should do this as well.
"The economy is not working unless it is working for everyone," she said.
"Paying employees a living wage will help us get there, and our councils and government organisations must show leadership."
Tauranga City Council voted not to introduce the living wage in February 2016 after commissioning a report to calculate the cost.
The report stated, at that time, the living wage had not been introduced by any other councils in New Zealand.
The cost of introducing the living wage for those directly employed by the council was found to be just $54,000 per annum.
The cost was estimated at $3.23 million when salary adjustments for those earning more were taken into account.
The living wage is considerably higher than the mandatory minimum wage of $15.75 per hour.
Living Wage Aotearoa convener Annie Newman said councils and Government employers should be leading the way on implementing living wage policies.
"Public money comes from citizens and should create greater wealth for citizens.
The Western Bay of Plenty District Council also discussed implementing a living wage policy in early 2015, but decided not to as it had no employees earning less than this.
The Bay of Plenty Regional Council said just eight of its 397 employees earned less than $20.20 per hour.
Rotorua Lakes Council paid 60 of its 427 employees less than the 2017 living wage.