Mayor Gregor Robertson says Vancouver is now the largest living wage employer in Canada.
The move means all city staff and most contractors will make at least $20.64 per hour in pay and benefits.
Robertson said the city's economic growth over the last five years made the move possible, and while that growth was good, there are "many who are being left behind and not enjoying the fruits of a booming economy."
"It's important that the city lead by example. As a very large employer, we need to address affordability," he said.
Robertson says he's hopeful a change in provincial government and talk of a federal poverty reduction plan will improve the minimum wage and income assistance rates, but too many people live in poverty in Vancouver.
He says it's important for the city to send a signal that paying a living wage is possible for other employers.
Contractors most impacted
However, the move changes little for most employees of the city, park board and police department, because most of them already make more than $20.64 per hour.
The true beneficiaries are contractors like janitorial and security workers, according to Nick Kassam with the city's purchasing department.
"While it may not be a significant amount, it does make an impact on those vulnerable sectors," Kassam said. "It's more of a leadership role that the city is taking. We want to walk the talk."
He says the city spends about $300 million per year on wages and adopting the policy will increase that by about $600,000.
Will contract costs increase?
Canadian Federation of Taxpayers spokesperson Scott Hennig says the policy could create future problems when it comes to the city finding affordable services from contractors.
"Every time you put up another wall or hoop you have to jump through to bid on a city contract, it means less people, less companies are going to bid on those contracts and then you're probably going to end up paying more because of that," he said.
"There's already enough red tape at city hall. They don't need to be adding another layer."
Deanna Ogle, campaign organizer for the Living Wage for Families Campaign, says Ucluelet First Nation, Huu-ay-aht First Nations, New Westminster, Quesnel and Port Coquitlam are other local governments paying living wages.
Pitt Meadows and Parksville are working to implement a similar policy.
With files from Anita Bathe