You’re absolutely right that there’s -types- of destruction. While you’re right that it seems unlikely someone would continue wearing a hosed pair of jeans out of inability to afford new ones (though it IS completely possible), there’s a weird tension between “acceptable” distressing/destroying and “fashionable” distressing/destroying.

And getting away with wearing annihilated jeans really is an economic indicator. You’ve got it on the money, pretty much.

Something I’ve noticed is you can often tell someone’s social class by how “destroyed” their jeans are. Anyone walking around in a destroyed pair of jeans is either too poor to afford a new pair (rare) or has a white collar job. Destroyed jeans are a way of saying “I have a good job and I don’t need the protection of a pair of work pants in my daily life.”