The site making the claim (from the "National Literacy Institute" which appears to be a commercial entity offering courses and coaching) does not provide sources. But the numbers align with the results of the PIAAC OECD study conducted 2012-2014. The U.S. government published the U.S. results from that study. The PIAAC definition for "literacy" is functional: Can people in principle read (i.e., form words from letters); AND do they understand the text, AND can they put the contents to work. They define the minimum skills for functional literacy as literacy level 2, which includes
- making matches between the text and information
- paraphrasing
- making low-level inferences.
By contrast, somebody who can only perform level 1 tasks, such as
- read relatively short continuous, noncontinuous, or mixed texts in digital or print format to locate a single piece of information
- enter personal information into a document
- recognize basic vocabulary
- determine the meaning of sentences
- read paragraphs of text
is still illiterate according to the definition used.
I understand the usefulness of this definition, and it reflects recent changes in the assessment of math skills. But I personally would not call somebody who can read a paragraph of text and determine the meaning of a sentence illiterate.1
That somebody cannot make sense of what they read or cannot make inferences may be for any of a myriad of reasons; but they can read.
The share of people who cannot read a paragraph of text or understand a sentence is between 4% and 8%, depending on how many of the 4% of the PIAAC participants who could not be assessed "because of a language barrier or a cognitive or physical inability to be interviewed" actually cannot read.
With respect to the "demands of a modern society": Functional literacy is indeed strongly correlated with economic and social success. Many prison inmates and welfare recipients have below-par reading skills.
1 The authors of a large German literacy study acknowledged that using the word "illiteracy" for people who actually have basic reading skills is both confusing to the lay audience, impairs international cooperation and puts a stigma on that group. They use "adults of low literacy":
Der Begriff „funktionaler Analphabetismus“ gilt als stigmatisierend und als ungeeignet für die erwachsenbildnerische
Praxis. Zudem hat die Erfahrung
seit der LEO – Level-One Studie gezeigt, dass
der Begriff missverständlich, da sehr stark erklärungsbedürftig
und zudem in der internationalen
Diskussion schwer anschlussfähig ist (vgl. Steuten
2014). Um diesem Umstand gerecht zu werden,
verwendet LEO 2018 den Begriff „geringe Literalität“ bzw. „gering literalisierte Erwachsene“