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A few weeks after launching the first wide-scale layoffs in its history, Microsoft Corp. admits it screwed up a key part of the plan.

The company is asking some laid-off employees for a portion of their severance back, saying an administrative glitch caused the software maker to pay them too much.

Lou Gellos, a Microsoft (nasdaq: MSFT - news - people ) spokesman, would not say how many of the 1,400 workers let go in January were overpaid, or by how much. Microsoft has said severance would be calculated by length of service and position in the company.

The Redmond, Wash.-based software maker is asking former employees for reimbursement, by check or money order, within two weeks, according to a redacted letter posted by the technology blog TechCrunch. Gellos confirmed the letter's authenticity.

With the recession biting into sales of Microsoft's core Office and Windows software, Microsoft said in January it would let up to 5,000 of its 94,000 employees go, the only mass layoff in its 34-year history.

Shares of Microsoft sank 54 cents, or 3 percent, to $17.46 in afternoon trading amid a broader sell-off Monday.

ASHLAND, Ohio (CNN) -- An Ohio bakery shut down in October is bustling again, with 60 eager employees who had expected a Christmas on the unemployment rolls.

Some 300 workers lost their jobs when the Archway cookie factory in Ashland, Ohio, was suddenly closed by the private equity firm that owned it. The workers also were left without benefits like health insurance.

But then Lance Inc., a Charlotte, North Carolina-based snack food company, purchased Archway at a bankruptcy auction. And last week 60 workers were asked to return immediately, with perhaps more coming back in the months ahead.

Kathy Sexton, a worker at the bakery, had been preparing her children for a very modest holiday. Watch the holiday brighten for workers »

"They said they understood," Sexton recalls. "They said, 'That's all right, Mom.' You always want to give them more, but ... I didn't think I would be able to."

Now she can.

Tiny Ashland has been struggling. Ohio has lost 200,000 jobs over the past eight years. The recent presidential campaign saw both candidates visiting frequently.

The outlook in Ashland became especially bleak when the Archway plant closed. Workers at the bakery said they felt betrayed when Archway at first said there would be more work in a day or two, but then changed the locks.

Rita Devan remembers.

"They just kept taking and taking until there was nothing left to take," Devan says, "and they didn't care that they were putting 300 people out of work."

Things are different now.

When it promised to reopen the bakery, Lance gave all 300 former Archway workers a $1,500 prepaid debit card.

"I was crying," Devan says of the gift. "I am like, 'What are these people doing? They don't know me. They don't know us. They don't know any of the Archway people. And they are giving each and every one of us $1,500.' "

Sexton -- the woman who'd been preparing her kids for a meager holiday -- says of the $1,500 gift: "It was awesome. My first thought was, 'I can give my kids a Christmas.' "

David Singer, CEO of Lance, says the gift cards were a way of letting Ashland know the new owners are different. "We wouldn't do it willy-nilly," Singer says. "We do want to make money. But this is the pool of folks that we intend to hire. We just wanted to let them know who we were."

The 60 workers rehired so far are earning their previous salary and retained their seniority. They also were provided health insurance from day one.

The bakery now produces Lance cookies that are sold to big chains like Target and Wal-Mart. But production of Archway cookies is scheduled to resume soon. Lance has told the employees that it hopes to have the plant fully operational by the end of 2009 -- that is, five lines of cookies being produced simultaneously.

The new owners say that if new orders keep flowing in, more jobs will follow.

Terry Mowry is another worker rehired by Lance. He says what has happened is hard to describe: "You just saw life being breathed right back into the face of these people."

And Devan says with a laugh: "I walked into the garage last night, and my husband says, 'You actually smell like a cookie again.' "

Worker productivity slowed in the summer while wage pressures increased, but both developments were better than expected and are unlikely to raise inflation alarms at the Federal Reserve.

The Labor Department reported Wednesday that productivity, the key ingredient for rising living standards, rose at an annual rate of 1.3 percent in the July-September quarter. That's down from the 3.6 percent growth rate in the second quarter, but slightly higher than the 1.1 percent increase initially reported a month ago and better than the 0.9 percent rise economists expected.

Wage pressures, as measured by unit labor costs, rose at an annual rate of 2.8 percent, after having declined at a 2.6 percent rate in the second quarter. The rate of increase in the third quarter was the biggest jump since a 4.5 percent rate in the fourth quarter of last year, but was below the 3.6 percent advance originally reported and that economists expected.

The Fed closely monitors developments in productivity and wages to see if inflation is getting out of hand. But the central bank was likely to view the recent developments as temporary and not long-run trends.

Analysts had expected a big downward revision in productivity given the fact that overall output, as measured by the gross domestic product, was revised to show a decline of 0.5 percent at an annual rate, a bigger drop than the 0.3 percent decrease that was originally reported.

Still, the 1.3 percent rise in productivity was the weakest showing since a 0.8 percent rise in the fourth quarter of 2007.

While rising wages and benefits are good for workers, if those gains outstrip increases in productivity it can create serious inflation problems as businesses are forced to boost the cost of their products to cover the higher wage demands.

On Saturday, Nov. 1, striking Boeing (BA) machinists will get a chance to vote on a proposed contract that could end a walkout that has halted plane manufacturing at the company since Sept. 6. Union leaders are crowing about the proposed four-year deal, calling it a victory for the workers. But management, while bruised, is walking away from the table with a few key wins, too.

For one, the company will be able to outsource as much work as it wants to on its new 787 commercial jet, the so-called Dreamliner that will be the most important plane in Boeing's lineup for the next decade or longer. The managers also exempted the planes and other products it makes in its defense operations from contract terms the International Association of Machinists & Aerospace Workers, or IAM, demanded.

"It was a pretty genuine compromise," says Paul H. Nisbet, an analyst with JSA Research in Malta, N.Y. "Boeing [managers] apparently held onto the right to run their business."

Just how much of a compromise will be something for workers to decide when they vote. IAM leaders, eager to sell the deal to their 27,000 striking workers, are pointing to the wage and benefit gains and job-security terms they've won.

Union Gains

"Our union has delivered what few Americans have—economic certainty and quality benefits over the next four years," said Tom Wroblewski, president of IAM's District 751 unit, which represents Puget Sound area workers. "In this round, we won the battle and made some significant gains."

The IAM was able to stave off changes management had wanted in health care and pension benefits, for instance. Boeing originally sought to shift some costs in medical care onto employees, but the new deal freezes the structure on the same terms as were adopted in a 2005 contract settlement. The union also forced the managers to back away from plans to deny a traditional "defined-benefit" pension plan to future workers and give them a 401(k) plan instead, and it in fact won increases in the traditional benefit. They also won wage increases of 5% in the first year, 3% in the second and third years, and 4% in the final year of the contract.

IAM leaders are pointing to a few other major gains:

•Some 2,200 facilities and maintenance employees have their job security guaranteed for the life of the contract.

•The IAM can compete for work that moves from one Boeing facility to another. If its members can do the work more cheaply than outsiders, they can get the work.

•Some 2,920 forklift drivers and other shipping personnel will not be laid off.

•Outside vendors must deliver products to IAM members in designated area, except for work on the 787.