In a perfectly competitive labor market a firm can hire as many workers as it likes at the going wage, so the supply curve it faces is the flat line SL. It keeps hiring while each extra worker is worth more than the wage, and stops at L₁, where the value of the marginal product equals the wage.
A firm with market power in its output market has to cut its price to sell more, so what an extra worker brings in is marginal revenue product, not the value of the marginal product, and that curve lies below and falls faster. Such a firm stops at L₂, which is to the left of L₁. Market power in the output market therefore means fewer people employed. The slider changes the going wage; every worker to the left of the cut-off is worth more to the firm than they are paid, which is what pays for the capital they work with.