Dr John Sentamu told the Church of England General Synod expressed his dismay that one in five people in work were not being paid the living wage, while at least six out of 10 families in poverty have at least one adult working.
“Yes they are working but they are still in poverty. This is an absolute scandal given our corporate wealth as a nation,” he said.
The Archbishop said the issue of a living wage was a question of “justice” and “kindness”, as he warned that anything less would weaken society.
“A fair wage for a fair day’s work; anything else is unjust,” he said.
The Archbishop was responding to a motion passed in the General Synod calling upon the Church of England to ensure that all its institutions pay at least the living wage.
General Synod member John Freeman said in an address that although the minimum wage had been a “step in the right direction”, it was not enough to provide a reasonable standard of living for the poorest in society.
“It is therefore part of our Christian duty to ensure that the least well paid who often do menial jobs that we all depend on do get a fair reward for their efforts,” he said. “There are estimated to be five million – 21% of the workforce – in this unhappy situation and we should make sure that the Church of England is not amongst those paying below the living wage.”
Mr Freeman said the £7.45 per hour - and £8.55 for London - recommended by academics earlier in the month deserved the “wholehearted support” of the Church.
He pointed to the experience of the Methodist Church, which he said had found that the costs of becoming a living wage employer were “not as prohibitive” as it had feared.
The Church of England’s central bodies have largely adopted the living wage, as have many dioceses.
“Other churches that have adopted the living wage include the Church of Wales, Baptist Union, Church of Scotland and the United Reformed Church," Mr Freeman continued. “If we join our fellow churches in paying the living wage, we will be together one of the larger employers paying it and an excellent example to the country.”
He added: “As a Church we have a duty of care to our staff to accord them the dignity that God gives us.”
The Reverend Stephen Pratt, of the Diocese of Lichfield, said it was “immoral” that the gap between rich and poor was widening.
He told Synod the people receiving emergency handouts from the foodbank run by his church were mostly in work.
Mr Robin Lunn, of the Diocese of Worcester, said it was a “massive indictment” against 21st century Britain that foodbanks had to be set up in the first place.
The Reverend Canon Kathryn Fitzsimons, of the Diocese of Ripon and Leeds, warned against the temptation of paying a living wage while reducing the number of hours worked by employees.
If organisations find themselves struggling to pay a living wage, she suggested those at the top end of the salary scale consider those at the bottom and how the money available for pay is distributed among workers.
The Bishop of Chichester, the Right Reverend Dr Martin Warner, said the Church of England was “in a strong place” to support and enact the living wage.
He said it was a good way of providing for unskilled, semi-skilled and other people “who find it most difficult to find worthwhile employment”.
“[It is] a great statement about our commitment to their dignity,” he said.
The Reverend Amanda Ford, of the Diocese of Leicester, said that a living wage would enable people to spend more time with their family, their community and in church.
“[People] ought to be rewarded for staying out of the benefit system,” she said.