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Because of nondiscretionary expenses. If that $5k has to go to food, rent, utilities, healthcare, car insurance, gas, etc., then you're basically just working that McDonald's job to exist and not actually accumulating money you can use to pay off a $5k gambling debt (or, y'know, buy a laptop or a couch or something).
Very few common expenses are truly nondiscretionary. One can easily live on like 8k a year. Most students do it. It does not require one to compromise on health nor on time. Just a bit of superfluous comfort and convenience. People go camping for fun, and that’s way less comfortable. Even the middle class mostly spends money as a status signal. The explosion of the luxury goods industry in recent years reveals how hollow the reason for most purchases are. Just like cima’s million dollar handbags and gladrags, of course they’ll swear up and down that all the stuff makes a difference to their QoL, but it really doesn’t.
According to the US Bureau of Labor Statistics, a figure of 25 k$/a is the average for a single low-income person. That figure includes 590 $/mo for "shelter" (including mortgage interest, property taxes, insurance, and rent) and 173 $/mo for "utilities, fuels, and public services". That figure also includes about 5 k$/a of non-essential expenses, but 8 k$/a for total essential expenses seems a bit low.
(Two-person low-income household, consisting of 1.8 adults and 0.2 child: 39 k$/a, including 686 $/mo for "shelter", 280 $/mo for "utilities, fuels, and public services", and 6 k$/a of non-essential expenses)
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I'm fully with you on how most people spend way more on frivolities than they think they do, and that most people living paycheck to paycheck are just spending irresponsibly. But I think you vastly underestimate how expensive nondiscretionary expenses are. Let's just take rent as an illustrative example. Typically people pay 1/3 of their income on housing. At $8k/yr, that's $222/mo. There's no way you're going to be able to spend $222/mo on rent without roommates. Indeed, an income of $8k for a family of four is 1/4 of the federal poverty level.
Your estimation of the expenses of living are so astronomically far from reality that I am a little vicariously embarrassed that you're suggesting them. You seem to act like bills practically don't exist - that a $5k expense is trivial because one can "shuffle fries around for a while, and [McDonald's] will give you the 5k". Frankly, it's like a child's imagination of where income goes ("Woah, you make $5k in a year?!?! Think of all the toys I could get for that!!")
I guess I stayed young at heart. Granted, even the other kindergarteners thought I hated wine and overhead too much. I’ve lived on that budget for years (I also hate work). I didn’t say 8k without roommates, for a family of four. Now that you mention it, people spending too much on their kids and their kids’ “education”(including public education) is also largely pointless and/or status signaling, and imo the main reason why they aren’t having more of them.
The poverty threshold is a relative measure, in practice if not in theory. People complaining about the working poor in the west are complaining that they don’t get to spend as much on status as others, which of course is a zero-sum game.
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Yeah I live on less than 20k a year at the moment and I'm very comfortable. I even eat out occasionally. Frankly I could cut costs a bit more if I wanted too.
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