Illiteracy is clearly a huge problem in America. But it is not the result of any kind of poverty or some social injustice that many make it out to be. It is simply the result children at school who do not care to learn or take the time to do homework, Do assignments, and prepare for class. It boils down to a complete lack of accountability and personal responsibility.
Illiteracy is a problem in America. If a person can't read they are at a disadvantage in the Information Age. They are unable to harness the power of internet search engines to access information to improve their life circumstances. For examples, they become slaves to the medical system, because they are unable to do their own research on drugs, treatment methods, and illnesses.
When I read comments on online articles, I see so many people making basic mistakes, it's a bit shocking to be honest. I see people type "would of" instead of "would have" and I find myself scratching my head. It's almost like these people paid no attention in school. There might be a day when the rest of the world writes better English than Americans.
There's no issue in terms of actual literacy, meaning people being able to read and parse written information. There's a problem with a general lack of education and being able to understand nuance and intelligently coherent ideas, but that's not an issue with literacy. It's just a matter of basic intelligence.