The UK "living wage" - an hourly rate based on the amount needed to cover the basic costs of living - has been raised by 20p to £7.85.
The voluntary rate has been adopted by more than 1,000 employers across the country, benefiting 35,000 workers.
It is now 21% higher than the compulsory UK minimum wage, set at £6.50 by the government.
A new rate for London, currently £8.80 an hour, will be announced later on Monday.
Firms who have signed up to the voluntary scheme include Barclays, Standard Life, the National Portrait Gallery, as well as many local councils and charities.
On Sunday, Citizens UK, the community organisation behind the Living Wage project, said the number of companies paying the rate had more than doubled in the past year.
Lack of 'opportunity'Despite this rise, research published on Monday by accounting firm KPMG - a supporter of the wage - found 22% of the working population earn less than the 2013 Living Wage - which was set at £7.65 an hour.
It said more than five million people were paid below that rate, and that women were more likely to earn less than men.
"This research is further proof that more workers are getting stuck in low paid work with little opportunity for progression," said former Labour MP Alan Milburn, the chairman of the Social Mobility and Child Poverty Commission.
He added that "far more needs to be done" and that both employers and government should take responsibility.
What is the difference between the living wage and the national minimum wage?The living wage is an informal benchmark, not a legally enforceable minimum level of pay, like the national minimum wage.
The national minimum wage is set by the chancellor each year on the advice of the Low Pay Commission. It is enforced by HM Revenue & Customs (HMRC).
The living wage is currently calculated by the Centre for Research in Social Policy at Loughborough University, while the London living wage has been calculated by the Greater London Authority since 2005.
The basic idea is that these are the minimum pay rates needed to let workers lead a decent life.
Rhys Moore, director of the Living Wage Foundation, said low pay was a strain on the public purse, as "firms that pay the minimum wage are seeing their workers' pay topped up through the benefits system".
He added that "rewarding a hard day's work with a fair day's pay" was the driving principle behind the Living Wage.
More than survivalOver the wider economy as a whole, wages are not rising as fast as prices, meaning real pay for many people is falling.
The latest figures show that average weekly earnings are rising by 0.9% excluding bonuses, below the rate of inflation (as measured by the Consumer Prices Index) which is 1.2%.
"Many people are working two and three jobs just to make ends meet," said Rev Lucy Winkett, rector of St James's Piccadilly and a supporter of the Living Wage.
"They are missing out on valuable time with their family; losing the chance to read a bedtime story with a child; choosing between lunch and dinner; and having no chance to socialise."
She added: "Hard working people should have enough to live, not simply survive."
Are you earning the living wage? Will you be affected by the increase? Send us your experiences by emailing . If you are willing to be contacted by a BBC journalist, please include a contact number.
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