The hotel was full of "single gals" who didn't yet have the money for an apartment, or didn't want the responsibility, yet needed a safe and relatively cheap place to live close to work.
Many single working people used SROs as a transition from home to independent living (i.e. like saving money for a house & marriage.)
Older people lived in SROs (from modest rooming houses to the Waldorf) when they no longer would or could care for a house.
As you say, the lawyers have gutted all those options.