I'm guessing this was a design choice: make things look less cluttered. E.g. picture your desktop with all labels shown completely... will look messy in my case.
However, you can fix this by drawing the label yourself. Have a look into custom draw which is a service provided by the list control. The thing is that it's usually an all or nothing approach, so this will likely require you to draw everything yourself: border, image, label, etc. The other option is to get hacky: subclass the window and draw the labels again after Windows did in response to several messages (unfortunately Windows does not restrict the painting to WM_PAINT
, an optimization that is a left-over from the old days...)