There's a logical fallacy there, I'm afraid. The fact people have no shared educated background because of modern literature, or because it's difficult - that has nothing to do with the actual quality of the works. Literature as art and, umm, "literary practice" are two different things. Besides, everyone knows what the classics are (Joyce, Woolf, Proust, Faulkner, etc...), and except for Ulysses everything is readable if you're just willing to take the time and effort. Literature and art can't stand in one place forever. It must be pushed forward, seek unexplored areas. It is no coincidence that no major novelist merely replicated what already has been done. And of course I don't have to tell you that not all great writers were respected during their time.
No, it has nothing to do with the quality of the works at all. In fact, the quality of writing in the early part of the century was phenomenal. Literature has sort of been in a tailspin since, it was so good, dynamic, innovative, etc (however, I think it was dynamic and innovative within the context of the art itself).
I have a variety of points, all I think are related, and all are quite loose.
First, literature has become overly specialized and "difficult" for the average educated person, and in its specialization, has lost its relation to life, the soul, philosophy etc. This argument has no logic. I am merely sharing my concerns that I hear from 99% of educated people when I discuss literature with them. Its the same with art, philosophy, and so on and so forth. Is the average person going to pick up Ulysses or In Search of Lost Time? Will even the highly educated person open these books? Who will read them but professors?
Second, is there such a plethora of books and art, we cannot share or discuss the great or influential art? Example: The last book that won the Booker Prize (a prize which I admit is a crock) had sold less than 800 books before it won--and thats even when it was shortlisted as a finalist. One of the books on the shortlist had only sold 350 copies. And even then, I read last week, that Baby Spice's biography had sold more books in England than the entire Booker list combined (even with Ian McEwan).
Third, are the demands for time and entertainment too much for the common person? Why would tired over-worked persons totally sated materially, choose to contemplate literature, or entertain themselves with a pop suspense book, a video game, American Idol, etc?
Fourth, is it capitalism which only rewards the Jk Rowlings and Stephen Kings, not the serious writers, that is the problem?
Fifth, is it Academia and the book reviewers (the few left), those experts and gateholders, who either have very specialized taste, or have failed to bridge the gap and enter certain works of literature into popular culture, as they did just 50 years ago?
I have no idea what the remedy is, but I know a great many writers and other artists are thinking about it these days. As a spenglerian, hehe, I think our culture has reached its second to last late civilaztion phase: End of any development in stylistic form. Senseless, empty, cumulative architecture and ornamental art. Imitation of archaic and exotic them. The previous stage of modernism is Modern art detailed as: Attempts to alter and provoke metropolitan city consciousness. Conversion of music, architecture and painting into mere arts and crafts.
Finally, I'll end on Juvenal (as satire seems to be the only thing left worth doing in lit):
It is hard not to write Satire these days