Maggie Atkinson, who represents children's services directors in 150 local authorities, admitted there was huge disparity in payment practices across different councils. Some even spread a 32-and-a-half week salary over an entire year.
"Where you have members of your workforce whose pay keeps them relatively poor in comparison with the rest of the nation, there is a false economy," she told The TES.
"If you pay someone below a living wage, their interaction with your local economy will be poor. What they are going to be is benefits claimants in your housing office, your council tax office or your local job centre. And what they will also be is prey to loan sharks."
Speaking at the association's annual conference in Manchester last week, Paul Ennals, chief executive of the National Children's Bureau, told directors that they should follow Boris Johnson's "living wage" policy. The Mayor of London has announced he will pay Greater London Authority staff at least pound;7.45 an hour, nearly 35 per cent above the national minimum wage.
But a show of hands at the conference revealed that only 10 delegates knew whether or not they paid school staff a "living wage".
Dr Atkinson said councils had a duty to help tackle child poverty through their employees' wages.
"There is a need for the public sector to step into the moral high ground," she said. "It's about all local authorities stepping up to the plate and saying there is a need to pay for quality." But some would struggle, she said, because they had received less funding than others.