I wish there were a way to measure “practical literacy” vs. “can recognize some words and sound them out.”
That said, let’s talk about what’s pinging around in my brain. Literacy rates worldwide went from about 12% in the early 1800s to about 88% in 2016.

I suspect that 2016 number is about the peak of what I deemed above to be “practical literacy.” Already, large portions — perhaps even the majority — of Gen Z is not even close to being literate in any real sense. This will probably only get worse as TikTok and similar scourges take over the collective culture. Literacy is now passé in the literal French verb sense — as in “past.” It’s no longer required nor desired for and by the majority of the population.
This ramifications of this change will be just as large an alteration of society as widespread literacy was. And I do not have any idea how it will play out, but that future is well on the way whether we like it or not. In most important aspects, it’s already here.