I would hazard a guess that people don't give up because there are better dancers around them - they give up because clueless 'experts' confront them ("She couldn't even hold a frame") when they are simply social dancers themselves.
Social dancers are not affected by Competitive dancers any more than they are affected by teachers. They look UP to the better dancers. it's the curmudgeony 'old farts' that grumble about the good dancers, hoping to get a drink bought for them because they 'entertained' a beginner.
Trust me, it's a lot harder to entertian schooled dancers. You're right to stay in the bar and dance for beginners - you certainly don't have to learn much, and you can probably get little jobs teaching these folks. After all, how do they know that all you know is a few steps 'on the dance floor'?
Everyone needs encouragement and a goal. Sad to say, your goal is a very low 'bar' (pun intended).