Text goes away when applying Auto Layout

Just remove the rectangle. You can customize the background color in the Auto Layout properties.

The problem is that the “rectangle” was turned into a simple vector object at some point so it’s not actually a rectangle, just a vector object with the name “rectangle” and the look of a rectangle. This can happen if you modify it in the vector editing mode or press Cmd/Ctrl + E to flatten it. The difference that you can’t modify individual four corners in the right panel when a simple vector object is selected but can modify them on a rectangle.

Figma can only create Auto Layout objects from the objects that have the type Rectangle, and can’t do it with simple vector objects.

Group the text and the rectangle then stack the text above the rectangle.