Labels are an optimisation, an imperfect shortcut. They are a way we represent ourselves to others. If you don't tell me you're an engineer, I have to ask a ton of questions to assess your area of competence and skill. If you tell me you're an engineer I can save minutes or hours by putting you in a rough box. If that box is unnecessarily constraining it'll become clear as we spend more time together.
When race, gender, sexuality are involved we agree that labeling to save time isn't something accepted. For all of the reasons why shouldn't label those groups applies other labeling.
Most agree that we shouldn't actively do it, but we definitely do it consciously and subconsciously. It's a very human trait, even if we don't like it. The brain just doesn't have the capacity to evaluate everyone from scratch every time, so it takes shortcuts, and 'accepts' people based on the way they present themselves. The kinds of clothes they wear, shoes they're wearing, and accreditation from mutually trusted institutions. I agree the shortcuts that cause harm should be curbed to the best of our abilities but we can at best notice it and correct after the fact - but it'll still happen.
Labels are an optimisation, an imperfect shortcut. They are a way we represent ourselves to others. If you don't tell me you're an engineer, I have to ask a ton of questions to assess your area of competence and skill. If you tell me you're an engineer I can save minutes or hours by putting you in a rough box. If that box is unnecessarily constraining it'll become clear as we spend more time together.