Children and old women, skeletal horses pulling battered wooden carts, men whose faces are dark and lined with soot, emerge from the clouds of acrid smoke as they heap their treasured scraps, then disappear again into the smoldering landscape.

The vast municipal dump at Santa Cruz Meyehualco is aflame.

The smoke drifts in massive waves across this already polluted city to the richest suburbs 15 and 20 miles away, leaving housewives, businessmen and government officials choking and coughing. Suddenly this long-ignored, long-forgotten corner of the metropolitan area is the preoccupation of everyone in the city.

For almost a week Meyehualco (pronounced May-eh-WAL-co) has erupted in spreading flames that now consume more than 30 of its nearly 400 garbage-buried acres and obscure most of the rest in toxic gray clouds. As workers and weary firemen explained, the decomposition creates dangerous fumes and heat. Sometimes there are explosions. When more garbage is dumped on top of the rotting piles, they seem to be extinguished, but sometimes, like last Sunday, wind-whipped fire begins to break out everywhere.

At any time of the year the air is likely to be noxious in this capital packed with humanity, its millions of cars and its ring of sprawling factories. pNow, toward the end of the dry season, dust and sometimes dessicated human waste from untreated sewage are blown aloft by the winds to make things worse. The bowl-shaped Valley of Mexico fills to overflowing with a filthy haze that often cuts visibility to less than two miles.

The burning dump reportedly has increased the sulfur dioxide content of Mexico City's air to 10 times normal levels. Although environmental and health officials say there is no emergency yet and an atmospheric inversion that held the smog locked down over the city appears to have broken, there are concerns that residents of slums near the dump, particularly babies, will suffer serious health problems because of the poisonous fumes.

Suddenly there is talk of establishing a new dump farther out of town and turning this old one into a park. But for the people here, for the moment, the work of scavenging on which many were raised goes on.

The ragpickers know the dangers, but, as one man who has labored here for eight years said, "There are many who know no other living." They grow used to the health hazards, he added.

It would be easy to imagine that the ragpickers of Meyehualco are at the bottom of Mexican society, the poorest of the poor. But they are not. They have jobs. Of 68 million Mexicans, close to 30 percent are unemployed or underemployed. Many of those have swarmed into this city, pushing the metropolitan area population to about 14 million -- more people than the New York City and Washington areas combined.

Those who have found a way to live off what the rest of the city throws away consider themselves relatively lucky.

Guadalupe Flores, 22, came here from the farmlands in the state of Hidalgo four years ago. There was no work at all for him there at all. Here, he says, he earns little: $15, maybe $25, and, if his luck is very good, $50 in a day. "Other times," said Flores, leaning on his pitchfork atop a mound of ashes, "it is hard to earn even 50 pesos" -- about $2.

Although the setting is more unsightly than most -- amid the ashes and smoke it looks more sinister than a surrealist Hollywood vision of Hell -- this business going on in the dump is much like other, more pristine Mexican enterprises. Everyone gets a cut of the action, and prerogatives are jealously protected.

About 5,000 scavengers make their living here. Each has his selected turf and each works for a cabo or chief who defends some particular group of plots.Little cuts are paid to the cabo -- perhaps he gets all junk made of lucrative tin -- while he in turn pays off people higher in the organization.

Normally it is a cozy little system, but the fires have brought out the scavengers' grievances. The announcement made this week, as the smoke spread over the city, that the dump may be moved and a garbage processing plant built to accommodate the refuse frightens some of them. Their livelihoods are on the line.

"The minute they shut this down, we go to the Zocalo (Mexico City's central square in front of the National Palace)," threatened Jose Gonzales, a young cabo.

"They talk about the inferno of Meyehualco," said Felipe Estrada, an older chieftain, as he considered the complaints from more well-to-do sections of the city that are bannered across the city's newspapers. "But the inferno is for us. Look at the way we have to work."

Like many of the scavengers, especially the cabos, Estrada saw nothing wrong with the labor itself, or the condition of his people, who generally appear well-fed and as healthy as could be expected considering their workplace. What makes him furious is the quality of the garbage he has been getting.

He denounced the drivers of the garbage trucks, who draw salaries from the municipal government and charge restaurants and other commercial customers extra. They pick out the most valuable refuse before their trucks arrive at the dump, Estrada complained, then charge a scavenger between 30 and 300 pesos (up to $15) to unload on his turf.

The scavengers' resentments and grievances may die out along with the flames. Many believe that once the smoke clears, the calls for relocating and modernizing the dump will fade.

But like the pollution, the discontent of these people and millions of more impoverished Mexicans is likely to linger as the gap widens between them and the nation's middle and upper classes. Like the flames of Meyehualco, it has deep roots and there is always the chance -- as businessmen and government officials now breathing Meyehualco's smoke constantly worry -- that it will erupt, and spread.