I'm not saying those people have it easy on £16K, but e.g. consider the insane costs for treating depression that my brother faces, with few assistance options, which he has to balance out of such a low salary already. This kind of thing can also vary greatly state to state, with some states practicing much worse forms of social austerity than others -- and my brother happens to live in a particularly bad state for this.
Many of his coworkers, earning the same or slightly less, also are the sole providers for their family and have dependents they have to support out of this wage too. It's a situation where your car breaking down can be an unmitigated life emergency, and people avoid getting serious medical conditions treated because they can't even afford a copay or afford to fill a prescription.
So you might be surprised that the real cost of living after accounting for this kind of thing translates into a pretty dire situation for someone earning $18K in the US.
I know many people in London who get by on
the minimum wage (~16K).
For people who can sustain this situation, it does offer ways to have a higher quality of life even on a low salary. But a lot of people have families to raise and personal situations to manage that are fundamentally incompatible with it, requiring them to afford other living arrangements, creating a bigger stress factor upon on their budget.
I'm more skeptical about not being in a free labor market. I know many people in London who get by on the minimum wage (~16K). I doubt the cost of living in a small-town factory in the Midwest is comparable to the cost of living in London.
It's a shitty situation, sure, but it sounds like a far cry from not being able to change jobs because a single day without any income would lead to insolvency.