Video report by Political Correspondent Lewis Vaughan Jones.
The new National Living Wage has come into force, meaning employers must pay workers aged 25 and over at least £7.20 an hour.
Unions welcomed the new rate for adults but said it was not fair that younger workers were missing out.
Business groups warned that firms' paybills will "ratchet up".
The government aims to increase the rate to £9 an hour by 2020, affecting an estimated nine million workers.
Research by the Resolution Foundation found that more than one in four employees in the Midlands, Wales and Yorkshire and the Humber will benefit, compared to one in seven in London.
Owen Smith, shadow work and pensions secretary, called it "a typically cruel sleight of hand from the Tories to introduce their version of the living wage with one hand, while taking five times as much in cuts to Universal Credit and Tax Credits with the other."
The head of analysis at the Joseph Rowntree Foundation, Helen Barnard said the new wage was an "important step towards a high-wage, low-welfare economy" but said it won't do a great deal for poverty on its own.
Around 2,300 employers have already signed up to the higher voluntary living wage of £9.40 an hour in London and £8.25 for the rest of the UK.
Living wage explained:
- All workers aged 25 and over are now legally entitled to at least £7.20 per hour
- Anyone under 25 should be paid a minimum of the national minimum wage. This is £6.70 for those over 21, £5.30 for those 18-20, and £3.87 for under-18s.
- The rate is different for apprentices in their first year, who can be paid £3.30 - rising to the minimum wage in their second year.
- For more information for employees and employers visit the government's living wage website