How do those people live, then? Subsidies from elsewhere. As noted elsewhere, this can be in the form of living with family, cash payments from family, transfer payments from government, illegal side hustles, etc.
A concrete example: when people say that Walmart is subsidized by taxpayers, what they mean is that Walmart can employ hundreds of thousands at below-subsistence wages only because the taxpayers will provide for their employees so that they can afford basic necessities. In the parlance, they do not provide a living wage, but their employees are still able to live due to government largesse. (I'm picking on Walmart because they are typically the employer of the largest cohort of government transfer payments in a state.)