How would a bigger labor pool favor people who are constantly online and/or spending labor?
They wouldn't necessarily have to be constantly spending labor, but those who are on the game more have more access to the labor and the ability to gain more materials that enable them to more effectively use labor.
Guy A has 5 hours a week to play
Guy B has 20 hours a week to play
Guy A gets in 1 hour a day
Guy B gets in 3 hours a day
Guy A has to burn more labor faster than guy B to take advantage of the bigger pool. While there is no end to the amount of activities one could do to burn labor, doing it in a manner that is productive/cost effective is a bit harder. When he logs back into the game 16 hours from now, he'll have 7680 labor to burn, plus 480 through his play time, giving him 8160. He has significantly less time to farm for materials or gold, significantly hampering his progress, and the activities he can perform to make money.
Guy B has more time and more access to the labor pool, likely even keeping it below cap. When he logs back into the game 16 hours from now, he'll have 7680 labor to burn, + 1440 generated throughout his daily play time, giving him 9120 labor to burn, which he'll easily be able to accomplish. Guy B has far more time for farming materials and gold for his endeavors, making it easier to accomplish his goals.
Unless there is something I'm not seeing here...
That being said, there are diminishing returns. If you're constantly burning labor as it is, it doesn't really matter how big the cap is. At the end of the day, what effects the constant burners most is regen rate.