This is because majority of the people in the world likes to be the best and therefore make ranks to let them know how they fare. Naturally, this is already considered as labeling by arranging in order by skills. Since each individuals are different in nature but they have similar attributes to others, they are automitically grouped together. As far as I understand, this is wrong and is the same as judging a book by its cover before reading the book.
I have no idea why people thnk labels are important. Personally I believe that they are completely ridiculous and usually the labels and brands vastly overprice their items because people are following a trend set by fashionistas on instragram. Many companies also exploit child labour to cut costs, which is absolutely terrible
I think some people can be too caught up in appearances and labels to do the right thing, especially young people. Children in school are very concerned with being in the "in crowd" and want to prove they are "cool." This can sometimes mean being cruel to others and making fun of other kids. We need to teach others that being nice is actually cool.
I agree that we often place people in specific category's by labeling them and this is not correct. Firstly, by labeling a person selectively place them in a broad group without aquatically knowing the inner workings and feeling of that person. We should not rush to judge and label without knowing the real person.
At the end of the day we are all people. It does not matter what label we attach to ourselves we are still people. Sometimes we forget this and we get too bogged down in the labels to see what really needs to be done. That is why I do not subscribe to labels, I subscribe to people.