The purchasing-power fallacy confuses real and nominal wages. Lower wages do not mean lower purchasing power if prices are also lower. It also confuses real and nominal aggregate demand. When unions are able to obtain above-market real wages for the employees they represent, real aggregate demand is reduced. Looking beyond the veil of money, within a system of voluntary exchange the production of one good is a source of demand for other goods.
People produce wine, for example, in order to be able to exchange it for things other than wine.
The production of wine is a source of the demand for things other than wine. The production of wine gives rise to incomes for all the people involved in producing wine. Receivers of the incomes use them to purchase goods for consumption. Some portion may be spent on wine, but most is spent on other things. So the source of the demand for any good is primarily the production of noncompeting goods.