The Labor Department on Friday said South Carolina’s rate plunged 2.5 percentage points over the past year to a seasonally adjusted 5.5%, and North Carolina’s dropped 2.2 points to 6.3%, outpacing the rest of the country.

“We are creating jobs,” said Michael Walden, an economics professor at North Carolina State University. That is the good news. “But we are also seeing people dropping out of the work force,” he added. And that might be a problem.

North Carolina payrolls grew by 65,000 over the past year while the labor force shrank by 49,400, Labor Department data showed. South Carolina employment rose by 37,600, but 23,900 people quit looking for a job.

The number of people dropping out of the labor force affects the way the unemployment rate is calculated: If you’re not looking for work, you don’t count as unemployed. And the pace of dropouts is part of wider national developments that have vexed economists and officials at the Federal Reserve.