Nearly a third of workers at Whanganui District Council are paid less than the 2017 living wage of $20.20 per hour.
The council said 68 of 219.55 full-time equivalent workers were paid less than than the agreed benchmark for a reasonable income.
A local living wage campaign group planned to present a submission to the council later this month, calling for change.
Marion Sanson from the Whanganui Living Wage Movement, said the problem was a huge imbalance between the pay of different workers.
"The divergence between the highest paid and the lowest paid is what concerns us," she said.
"We're asking council to implement a living wage for workers and contractors."
The living wage was designed to enable people to participate in society and not just live hand-to-mouth, she added.
The cost of moving to a living wage policy for the council has been estimated at just over $122,000.
Mayor Hamish McDouall is one councillor in favour of the living wage.
"I support the principle of a living wage," he said.
The new living wage of $20.20 officially comes into effect on July 1.
It is voluntary, unlike the minimum wage which is currently $15.75 per hour.
Ms Sanson said the group referenced the council's own "leading edge" strategy in its submission, which states the economy should work for everyone.
Another of the strategy's five main points is the community should be "deeply united".
Ruapehu District Council had an even higher proportion of workers earning less than the living wage than Whanganui.
Twenty-four of the Ruapehu District Council's 87 staff were earning less than $20.20 per hour.
Two students working at the council during holidays were not included in the figure.
A spokesman for Ruapehu District Council said 19 of the staff paid less than $20.20 were part-time, students, cadets, casuals or WINZ part-funded staff.
"The remaining seven are paid between $19.00 and $20.00. These staff are paid in line with industry standards for their role," he said.
"It would not be practical for council to pay the stated living wage to all employees."
Rangitikei District Council had nine employees earning less than the living wage, and Horizons Regional Council had just three.
Annie Newman, Living Wage Aotearoa convener, said councils and government organisations should be leading the way on the living wage.
"Public money comes from citizens and should create greater wealth for citizens."
"If councils are generating poverty jobs, there is a moral reason why that should change."
There were more than 60 accredited living wage employers in New Zealand, mostly unions and charities.
The Wellington City Council had already implemented a living wage for its own workers which was due to be extended to contractors by July 1.
Auckland Council and Nelson City Council have included living wage policies in their draft annual plans this year.