National secretary of the Service and Food Workers Union John Ryall said the move should be extended to workers employed by council contractors.
"While it is important to back the principle of the living wage, that principle is about all workers, both directly-employed and contracted, being paid enough to live decent lives," he said.
"Our members, who are employed to work for councils all across New Zealand as cleaners, security guards and in a range of other service roles, are frequently employed by contractors and are on some of the very lowest pay rates in the country," he said.
Whether the policy will be extended to contractors has not been specified by council in the resolution. The decision will be ratified in July.
Living Wage Aotearoa national convenor Annie Newman told Radio New Zealand they were excited about Hamilton City Council coming on board with the policy.
But she said councils needed to ensure those workers who were delivering services through contractors were also paid the living wage, because they were often the lowest paid.
That included workers in waste management, cleaning, catering, and security, who were often paid just above the minimum wage.
"Over a period of years low paid workers have lost a great deal of ground in terms of their incomes, and what we're seeing is a growing working poor.
"Councils are responsible for cities, and cities have a large groups of low-paid workers who can't afford to survive on the money that they're making.
"What's exciting is that some of these councils are now recognising that they have the ability to make a difference to the lives of some of the communities that they're responsible for."
Ms Newman said Wellington and Auckland councils were also investigating what implementing a living wage would mean for their cities.
The Public Service Association called on other councils to follow Hamilton's lead.
"The council should be applauded for what is a very meaningful step in trying to lift wages and improve people's standard of living,'' national secretary Brenda Pilott said.
"A living wage will make a big difference to all those who work hard to professionally deliver services, yet earn minimum wages.''
Ms Pilott said the union also encouraged the council to include the living wage in all its agreements for contracted services.
"Providing a living wage is about valuing staff and being a fair employer. Hamilton City Council has blazed the trail on the issue, and other councils now need to step up and do the same.''
