The idea that we live in a meritocracy is clearly wrong; and anyone who genuinely believes that is blind to the realities of this world.
This is absolutely true, and correct, but... meritocracy isn't even something we should aspire to live in. Partly for the reasons you have already put forward, the whole concept is so self contradictory by its own nature; but also because we just
shouldn't be reserving the well paying, secure jobs; and a decent standard of living, to people who meet the right criteria.
Everyone should have a good life, even if they aren't intelligen,or make bad choice, or fall behind or whatever. We shouldn't even just let people be condemned to poverty - and that is half of what makes the rhetoric around "meritocracy" so nasty. It's accepts that some people's lives should be so much worse than others, regardless of merit.