In the context of this particular finding, the source [0] defines literacy as
> [..] as a lack of proficiency on the PIAAC, an internationally validated literacy exam. Adults who score below Level 3 for literacy are not considered proficient and are defined as at least partially illiterate in this study. Adults below or at Level-1 literacy may struggle to understand texts beyond filling out basic forms. Drawing inferences or combining multiple sources of texts is likely too difficult. Adults at Level 2 can read well enough to evaluate product reviews and perform other tasks that require comparisons and simple inferences, but they are unlikely to correctly evaluate the reliability of texts or draw sophisticated inferences. Adults at Level 3 and above are considered fully literate in this study. They can reliably evaluate sources, as well as infer sophisticated meaning and complex ideas from written sources.
In other words, it seems like the headline has been sensationalised; if half of the US has a level 3 literacy, I'd say they're not doing too bad at all.
[0] https://www.barbarabush.org/wp-content/uploads/2020/09/BBFou...