It becomes a real problem because if they refuse to prosecute for misdemeanor theft, then that "first" offense is probably nowhere near a real first offense. These hypothetical people commit many offenses before getting hit with the first conviction, and can reoffend many more times in the future because they don't get prosecuted.
If we make it a felony, then many people get overly harsh sentences, but making it a misdemeanor went in the opposite direction and made it so that hardly anyone actually ends up being prosecuted. It's a shitty catch-22.
Really, the issue is police and prosecutors not going for the "boring" little crimes in favor of higher profile cases involving drugs or other felonies. Part of that is drug offenders clogging up the jails and prisons. When jails get full, misdemeanors become deprioritized. The majority of our prison system is devoted to holding marijuana offenders, which leaves little room for other offenses. Inevitably, drug crimes get prioritized over relatively small automotive break-ins, leading to crowded jails, and less room for other offenders. Another catch-22.