Gaps in literacy ability between children from different socio-economic backgrounds are evident before formal schooling begins. Low income makes a minor contribution. Socio-economic status exerts its influence on early literacy primarily through its association with other factors. Children from disadvantaged families are less likely to have experiences that encourage the development of fundamental skills for reading acquisition, specifically phonological awareness, vocabulary and oral language. These skills underlie the cognitive processes in the “simple view” of reading – word identification and language comprehension. Low quality early home literacy environments suppress children’s genetic potential, increasing the risk a child will struggle to learn to read. In addition, children from low socio-economic status backgrounds are more likely to have infant health outcomes associated with cognitive impairments, such as preterm birth and low birth weight, and are less likely to attend preschool. The risk factors associated with the failure to develop early literacy skills are cumulative and interactive. This literature review describes a predictive pathway between social disadvantage and poor early literacy.